Understanding Professional Tax: Is It Based on Earned Gross Salary or Offer Letter Amount?

Dear All,

Please clarify: for determining the applicability of Professional Tax, does Gross Salary refer to the Gross Salary earned or the Gross Salary stated in the offer letter?

Regards,
Narendra Ch

I do not know what you quote in the offer letter in the name of salary. Many companies may be quoting CTC (fixed components of salary + variables that a company treats as cost to the company). The Professional tax shall be calculated on gross salary, which means the fixed components of salary such as basic + DA + HRA + any other allowance which an employee draws regularly every month without any deduction. The rates and salary slabs may vary from state to state. So check with your state legislation for this.

Regards,
B. Saikumar
HR & Labor Relations Adviser
Navi Mumbai

Thank you for your reply, Sir.

My doubt is whether to consider the salary earned (based on the days worked by an employee in the month) or the salary fixed as per CTC.

Regards,
Narendra Ch

Dear Narendra,

PT is calculated on a monthly basis depending on your earnings for a particular month, based on your attendance.

Regards,
Manish

It is the gross salary earned at actual before deductions, if any. The slab of PT varies from state to state.

Can we get any documentary evidence, GO, or Gazette on the same? Please share if any one of you has the same as it is requested by one of our clients.