Dear Sir, Greetings! You are requested to advise on the deduction of Professional Tax from the salary. Do we need to consider the Attendance award, Overtime, Hardship allowance, or any other allowances that are not considered on a regular basis, whether payable in cash or kind, in the salary while computing Professional Tax?
Regards, Milan Patel
From India, Ahmedabad
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4Regards, Milan Patel
From India, Ahmedabad
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Understanding Profession Tax
Actually, profession tax is not merely a tax on salary, but it is the revenue received or generated by working with an employer, doing a profession, or running a business that is subjected to tax. As such, you have to include all your allowances to decide profession tax.
Profession Tax for Different Professions
In the case of a profession, such as a lawyer, the fees that he collects from his clients are the revenue taxable. For a businessman, it is his turnover which is the base for deciding the profession tax. For an employee, the salary he received during a period, say six months, is the amount on which tax is decided. That salary should include all allowances, including overtime allowances, hill allowances, hardship allowance, bonus, and ex gratia that he gets. At the same time, any reimbursement, like reimbursement of mobile phone bills, travel reimbursements, etc., shall be excluded.
Hardship Allowance
Hardship allowance is an allowance paid considering the hardship involved in the work. It is part of salary for income tax purposes as well. Therefore, it cannot be excluded from salary for the calculation of profession tax.
From India, Kannur
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Actually, profession tax is not merely a tax on salary, but it is the revenue received or generated by working with an employer, doing a profession, or running a business that is subjected to tax. As such, you have to include all your allowances to decide profession tax.
Profession Tax for Different Professions
In the case of a profession, such as a lawyer, the fees that he collects from his clients are the revenue taxable. For a businessman, it is his turnover which is the base for deciding the profession tax. For an employee, the salary he received during a period, say six months, is the amount on which tax is decided. That salary should include all allowances, including overtime allowances, hill allowances, hardship allowance, bonus, and ex gratia that he gets. At the same time, any reimbursement, like reimbursement of mobile phone bills, travel reimbursements, etc., shall be excluded.
Hardship Allowance
Hardship allowance is an allowance paid considering the hardship involved in the work. It is part of salary for income tax purposes as well. Therefore, it cannot be excluded from salary for the calculation of profession tax.
From India, Kannur
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