Understanding Professional Tax: How Do You Calculate It for a Final Settlement?

asit kumar santra
On a Full & Final Settlement, one employee has earned as per the attached document.

What is the actual Professional Tax for this employee, please?

Regards
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manjunathhegde
Professional Tax Details

Professional Tax will be ₹200/- (PT includes pay or wages, DA, arrears, bonus, perquisites, and profits in lieu of salary).
deenajag
PT rates vary for each state. I believe you are located in Bengal and hence you wish to have the PT for that state, which is ₹200 per month above ₹40,000/-. As a general rule of thumb, as per your example, PT will be applicable on Basic + OT + Notice Pay + Retrenchment + Other Allowances. However, to be on the safe side, it is better not to make any deductions from the retrenchment pay.

For your reference, you may refer to the definition of Salary as given in the State TAX on Profession, Trade, and Calling. The term salary is defined as follows: "salary" or "wage" includes pay or wages, dearness allowance, and all other remunerations received by any person on a regular basis, whether payable in cash or kind. It also includes perquisites and profits in lieu of salary, as defined in section 17 of the Income-tax Act, 1961, but does not include bonus in any form, and on any account or gratuity.

As you can see, it also refers to Sec 17 of the IT Act for profits in lieu of salary, wherein as per Sec 17 (3) Profit in lieu of salary includes:

(i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto.

I request other esteemed members to share their points of view.

Regards,
Deena Jagasia
gauravsoni.0232@gmail.com
Professional Tax Slab of West Bengal

- Up to Rs. 1500/- = nil
- Rs. 1501/- to 2000/- = Rs. 18/-
- Rs. 2001 to 3000/- = Rs. 25/-
- Rs. 3001 to 5000/- = Rs. 30/-
- Rs. 5001 to 6000/- = Rs. 40/-
- Rs. 6001 to 7000/- = Rs. 45/-
- Rs. 7001 to 8000/- = Rs. 50/-
- Rs. 8001 to 9000/- = Rs. 90/-
- Rs. 9001 to 15000/- = Rs. 110/-
- Rs. 15001 to 25000/- = Rs. 130/-
- Rs. 25001 to 40000/- = Rs. 150/-
- Rs. 40001/- = Rs. 200/-
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