Is It Right to Deduct Professional Tax from Net Salary in Maharashtra? Seeking Clarity and Legal Insight

Hello All, I would like to seek your guidance and assistance regarding the below issue/concern which we are facing in our organization:

Professional Tax Deduction Issue in Maharashtra

I work for a company in Mumbai, and for the state of Maharashtra, there is a Professional Tax applicable which is deducted from our earnings every month. It's Rs. 200 for 11 months and Rs. 300 for February, totaling an annual figure of Rs. 2500.

But in my company, the PT is deducted from the NET SALARY (take-home salary).

For example:
Gross Salary = 40000
- (Deductions) = 3000 (this deduction includes PF, gratuity, and other small components)

NET SALARY = 37000 (this is the defined take-home salary in our Offer Letter and Appointment Letter)

Now, my company deducts Rs. 200 from Rs. 37000, which is my Net Salary. So when the salary is actually credited to my account at the end of every month, we have a difference of Rs. 200.

I would like to know if this is the correct way to deduct Professional Tax. If it's yes, then I am wrong. But if it's not the correct way, I need your help to let me know the Article and Clause in the Law which gives a clear indication regarding the deductions of Professional Tax.

Your help regarding this query will be highly appreciated.

Your tax is being calculated on your gross salary, and the amount remaining after PF & ESIC deduction is your net or take-home salary. If there is any tax liability, it will be deducted from this net salary only.

Regards,
Neelam

PT should be deducted from the gross salary (total payable).

Regards,
Nilesh Dhameliya

What is your confusion? Salary cannot be called net salary until all deductions are made from it. So, whatever salary you are receiving in hand is called the net salary. It cannot be called the net salary until the deduction of PT is made.
Regards

Tax amount is never mentioned in the offer or appointment letter. The company provides the calculation of "take-home" salary and then deducts the tax on your behalf. If you are expecting that the offer letter should mention the taxes, then read the letter again. There must be a sentence stating that the tax arising from this salary will be deducted as per the tax rules of India.

Going beyond the professional taxes, the income tax (as it will be applicable to you if your salary is 40K/month) can also be deducted from this salary, and then it is called "Net Salary." If your salary slip indicates otherwise, then you can check with your finance department about the proper wording in the salary slip.

Best Regards,
Amod.

In a nutshell, your company is not doing anything illegal; they are doing what they are supposed to. Professional tax is deductible from the salary.

Professional Tax Deduction Guidelines

The Professional Tax is to be deducted from the Gross Salary only. Every state has its fixed PT Slabs.

Salary Slabs and Professional Tax Rates

- Salary for the month in Rs: Profession Tax for the month in Rs
- Less than or equal to 7,500: Nil
- 7,501 to 10,000: 175
- 10,001 and above: 200 per month except for February (Rs 300 for February)

Profession Tax Penalties

- Delays in obtaining Enrollment: A penalty of Rs. 2 per day and for Registration, a penalty of Rs. 5 per day.
- Providing false information regarding enrollment: Penalty of 3 times the tax amount.
- Non-payment or late payment of profession tax: Penalty is equal to 10% of the amount of tax to be imposed.
- Late filing of Returns: Penalty of Rs. 300 per return.

Exemptions from Profession Tax

Profession tax is exempted in the following cases:
1. Senior Citizen above 65 years of age is tax exempt.
2. Person suffering from permanent physical disability.
3. Parent of a child suffering from physical disability.
4. Parent of a mentally retarded child.

Regards

The employee is responsible for paying taxes like PT and TDS, and it is the employer's responsibility to deduct them from your salary in a timely manner and ensure they are paid. In the appointment letter, the employer may only highlight statutory deductions such as EPF, ESIC, and SWWF.

Hello Sir,

Good evening.

I am confused about the profession tax. Form 16 deducts Profession tax and PF from the Gross salary to calculate the Net Salary. I want to file my salary Income tax return in India, but I am confused about the profession tax. Can you please guide me on whether profession tax is deducted from the gross salary or not on the Income tax return sheet (ITR I)?

If it is deducted, please let me know under section 80C & 80CC or what?

Regards,

Laxman

Email: laxmanparmar41@gmail.com

I am so confused about Profession tax deduction. I want to know if profession tax is based on the fixed salary of an employee or their actual salary. Please let me know.

Hello,

I have some doubts regarding Professional Tax. I am working in a company registered in the USA, and I am based in Pune. My offer letter states the company name as Inc., not Pvt Ltd. Additionally, they do not deduct Professional Tax from my salary.

I would like to know if this is acceptable or if there is an issue with this arrangement. Any assistance or clarification on this matter would be greatly appreciated.

Regards,
Abhinav

Professional tax needs to be deducted from the salary as per the pay range. Whether the company is called Inc or Pvt Ltd, PT will have to be deducted.