HR Internship Dilemma: Are Contract Workers Subject to Professional Tax in Chennai?

Hello everyone, Currently, I am doing an HR internship in Chennai at X Company. The HR manager asked me whether contract laborers are covered under the professional tax or not. If anyone knows the answer, please let me know. Thank you.

It is interesting to see your manager asking an intern a question relating to law. In fact, many managers do this; they give a task to their juniors to find a solution to an issue, and once it is obtained, they present it to the top management as if it were their own findings!

Understanding Professional Tax

Concerning the question, I would like to say that a professional tax is a tax on revenue and not necessarily a tax on the salary paid. Concerning employees, it is the duty of the employer to deduct PT from the salary paid to employees and remit it to the local administration. For employees whose wages are paid by someone else (contractor/third party/outsourced partner), that person should deduct tax from their salary and pay it to the LSG. There is no way employees engaged through a contractor can be spared from paying tax to the local authorities. As the principal employer, you should also ensure that the PT has been paid to the local administration by the contractor.

The answer is yes, if an individual's earnings are more than Rs. 20,000, they are required to pay professional tax. In Tamil Nadu, those who are salaried or self-employed are eligible for the payment of professional tax. It is essential to know this as an HR intern because, in the future, you will have to deal with staff and contractors too.

Your HR Manager can explain in detail the rest because there are more aspects that exist which are required for a business establishment, such as exemptions, etc.