Professional Tax is a state-level tax that is paid by individuals/professionals in India. This tax is levied in Tamil Nadu on persons employed in wages, in any profession, trade, calling or employees drawing a salary, including contract employees and employees in the private sector, local authority employees and teachers, principals, lecturers, etc. The tax is deducted by employers and therefore is considered part of the employee’s wages or salary. For those people employed under their respective companies or industries, particularly the business-oriented companies, including legal, medical and many more service industries, professional tax is one major expense they have to factor in when planning their budget.
In this blog, you will get information about Tamil Nadu Professional Tax, including the rates for payment, exemptions, and other necessary details.
What is Professional Tax?
Professional tax is an income tax applied by various state governments on professionals, trades, and others who are engaged in any Job or occupation. This tax is paid according to income and is normally subtracted from the remuneration earned by employees. The professional tax varies from state to state, and in Tamil Nadu, it is paid under the Tamil Nadu State Tax on Professions, Trades, Callings, and Employments Act, 1992.
Who is Liable to Pay Tamil Nadu Professional Tax?
- Salaried Employees: Employees of private companies, as well as governmental and private offices, firms, corporations, factories, etc., are bound to pay professional tax. Withholding tax is paid in full by the employer at source, and then the rest is paid to the government.
- Self-Employed Professionals: This applies to medical practitioners, attorneys, Modification charter accountants, engineers and any other practising professionals who operate under their own steam and are supposed to pay professional tax depending on their income earnings.
- Business Owners: The professional tax is also paid by trade and commerce business owners depending on the amount of income they make.
- Other Individuals: Freelancers, those practising any profession or calling, are also subjected to pay professional tax if applicable.
Professional Tax Rates in Tamil Nadu (2024-2025)
The tax regime of Tamil Nadu implements Professional Tax as a Principal tax where the amount of tax levied actually increases as the income increases. It is possible to distinguish different slabs by the tax, and higher earners pay the most. The following is the professional tax slab as per the salary earned by an individual for the second half of the fiscal 2024-2025.
1. For Salaried Employees
- Income up to ₹21,000 in six months: There is no professional tax as such.
- Income between ₹21,001 to ₹30,000 in half a year: ₹180
- Income between ₹30,001 to ₹45,000 in six months: ₹425
- Income between ₹45,001 to ₹60,000 biannually: ₹930
- Income between ₹60,001 to ₹75,000 in six months: ₹1025
- Income above ₹75,000 in six months: ₹1250
2. For Self Employed Professionals
Self-employed professionals such as doctors, lawyers, and chartered accountants are required to pay a fixed tax based on their profession:
- Annual Income less than ₹1.5 lakh: ₹2,500 per annum.
- Annual Income between ₹1.5 lakh and ₹3 lakh: ₹5,000 per annum.
- Annual Income above ₹3 lakh: ₹10,000 per annum.
3. For Business Owners
Business individuals also pay professional tax, depending on their level of business; this depends on the amount of turnover in business. It also depends on the kind of business and its revenues.
Exemptions of the professional tax
While professional tax is applicable to most professionals and employees, there are several exemptions available under Tamil Nadu law:
- Individuals: Individuals exempted from professional tax include women employees who earn below ₹ 21000/total in six months.
- Senior Citizens: The elderly people, that is, people who are 65 years old and above, are relieved from paying professional tax if they earn below the exemption level.
- Individuals with Disability: The professional tax is not applicable to persons with disabilities who earn less than a specified amount.
- Certain Occupations: In most cases, certain classes of participants, for example, armed forces personnel or employees in some sectors, may be allowed exemption.
How to Pay Tamil Nadu Professional Tax?
The payment process of Tamil Nadu Professional Tax is also very easy which I am going to explain below. Here’s how you can pay your professional tax:
1. For Employers
- It is the responsibility of employers to subtract professional tax from the monthly salary of the employee.
- The tax has to be paid to the government on a monthly basis through the official payment methods, as shown below.
- Employers are also required to file monthly PT returns, which are accompanied by proof that professional tax has been paid to the government.
2. For Self Employed Individuals & Professional
Professional tax is payable annually by everyone who carries out a business for profit or is a freelancer/professional. The tax can either be paid through the online portal of Tamil Nadu Government’s or through any of the centres authorized for the payment.
Online Payment Process:
- Visit the Tamil Nadu Commercial Taxes Department’s official website.
- register with the portal if you haven’t
- Select the right subcategory (self-employed, business etc.)
- Enter the necessary details to calculate the professional tax due amount and then decide on the payment method.
- This can be done through debit/credit card or net banking.
- The receipt should also be retained to act as evidence of the payment.
As proposed for any self-employed professional, business owners are also required to pay the professional tax to the Tamil Nadu government. This can be done through the online portal or through cash payment at appointed points of collection.
Consequences arising from Failure to Pay Professional Tax
Failure to pay professional tax on time can lead to penalties, including:
- Late Fees: Interest of 2% per month on the amount of tax may be charged in the event of a delay in payment of the tax, in some cases it goes upto 10%.
- Legal Action: If a taxpayer fails to pay taxes several times, then legal measures may be taken, including fines and prosecution.
- Interest on Due Amount: It is also important to note that interest shall be charged on any outstanding amount of tax, and thus, the amount to be paid rises further.
Conclusion
Tamil Nadu Professional Tax is a key component of the state’s revenue, ensuring that every person earning an income is required to make professional tax payments. This tax is paid by employees and self-employed personnel, though exemptions for income, occupation, and more are allowed. The applicant needs to bear in mind the proper rates so as to be able to meet the payment schedule and avoid penalties.
With such types of information and the observation of payment schedules, it is possible to make the process of professional tax for businessmen and individuals in Tamil Nadu easier.
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