Professional Tax Deduction Confusion: Should Directors Pay Twice for Two Companies?

Professional Tax Deduction Clarification

Can someone clarify the Professional Tax deduction? A Director is paid remuneration per month for two different companies. Should we deduct Professional Tax for both companies or just one company?

Director's Professional Tax Deduction

A director is not an employee; he is a professional in a business entity. His professional tax should be deducted under PTEC.

Hi Ramesh, can you confirm:

i) Whether the Director you are discussing is an 'employee' of these two companies or a partner.

ii) Is he drawing a salary, any other remuneration, commission, or a share of profit from both these companies or only from one company?

iii) Whether both companies are located within the same state or in two different states.

Directors as Employees

Directors can also be employees, including Executive Directors or Functional Directors, whether on the Board or outside. There is no bar. If there are nominees from participating stakeholders such as Banks, LIC, RBI, or state or central governments, they may be entitled to only sitting/meeting fees plus out-of-pocket expenses, as they may be drawing a salary from their respective employers.

Understanding Professional Tax

Professional tax is a tax levied by the state government and applies to your total salary. You can regularly find the deduction for this on your payslip every month. Professional tax is a source of revenue for the government and is used to improve services for professionals in that state.