Is Professional Tax Required for a Small Team of 5 in Andhra Pradesh? Seeking Clarity on Eligibility and Deductions

Hi,

We started a new company with a team size of 5 in Andhra Pradesh. To my knowledge, PF/ESIC won't be applicable due to the small number of employees.

I have a small doubt: is Professional Tax applicable? What are the eligibility criteria for professional tax, and is there a specific limit for PT deductions? For example, how many employees are required for PT deduction?

Can anyone help with this query?

Thank you,
Suneetha
HR

Understanding Professional Tax in India

Professional Tax is a tax imposed by the State Governments of India on salaried individuals working in government or non-government entities, or in the practice of any profession, including Chartered Accountants, Doctors, Lawyers, etc. This type of tax has been in implementation for a long time, and states were conferred the power of levying the tax under Clause (2) of Article 276.

The rate at which professional tax is charged is based on the income slabs set by the corresponding State Governments. The maximum professional tax that can be imposed by any state in India is Rs 2,500/- for the Financial Year 2016-17. Professional tax is deducted by employers from the salary of salaried employees and is deposited with the State Government. Other individuals must pay it directly to the government or through the local bodies appointed to do so.

States Where Professional Tax is Applicable

The professional tax in India is applicable in Andhra Pradesh, Assam, Bihar, Chhattisgarh, Goa, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa, Tamil Nadu, Telangana, Tripura, and West Bengal.

Professional Tax Slab – Andhra Pradesh

Monthly Salary | Professional Tax (P.M)
---|---
Up to Rs. 15,000/- | NIL
Rs. 15,001/- - Rs. 20,000/- | Rs. 150
Rs. 20,001/- or Above | Rs. 200

States Exempted from Professional Tax

States exempted from professional tax are listed below:
- Arunachal Pradesh
- Haryana
- Himachal Pradesh
- Jammu & Kashmir
- Punjab
- Rajasthan
- Nagaland
- Uttaranchal
- Uttar Pradesh

Union Territories Exempted from Professional Tax

Union Territories exempted from professional tax are listed below:
- Andaman & Nicobar
- Chandigarh
- Dadra & Nagar Haveli
- Daman & Diu
- Delhi
- Lakshadweep
- Puducherry

I hope this information will be valuable for your queries.

Regards,
Amit

Applicability of Professional Tax as per the Constitution of India

Article 276 of the Constitution of India provides that "there shall be levied and collected a tax on professions, trades, callings, and employments, in accordance with the provisions of this Act. Every person engaged in any profession, trade, calling, or employment and falling under one or the other of the classes mentioned in the second column of the Schedule shall be liable to pay to the State Government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. Provided that entry 23 in the Schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time." This means there are no mandatory rules about the number of employees.

It is mandatory to pay professional tax. The taxpayer is eligible for an income tax deduction for this payment.

Regards

Hi Sunny,

Greetings of the day!

Enclosed herewith are The Gujarat Tax on Professions, Trades, Callings, and Employment Rules, 1976 act rules & forms for your ready reference. You will find eligibility and other details in the enclosed document, and the FAQ will help to solve all your queries.

Please check the PT Act of Andhra Pradesh. In the beginning of the act, its applicability vis-a-vis manpower will be mentioned.