Are Leave Salary and Bonuses Subject to Professional Tax? Let's Discuss the Facts

Is leave salary and bonus liable to pay professional tax?

No, it is not necessary to pay professional tax on leave salary and bonus. Professional tax is usually levied on the income earned through professional or employment services and is deducted from the salary of employees based on a predetermined slab rate by the state government. Leave salary and bonus are typically considered as additional benefits and are not subject to professional tax in most cases. It is advisable to consult with a tax expert or refer to the specific tax regulations in your region for accurate information regarding professional tax liabilities.

Hello Aniket, Bonus received by an employee is taxed in the year of receipt, and leave encashment of unused paid leave during the employment period is taxable as it is considered income from salary. In this case, the related employee can get tax relief under Section 89.

Professional tax is calculated based on the gross income received during the tax period. Additional incomes like bonuses and leave surrender salary automatically merge with the gross income for the tax period. Therefore, there is no need to deduct tax separately on such incomes.