If you are a paid professional, you have probably seen the phrase "professional tax" on your paycheck or Form 16. So, what exactly is a professional tax, and why should you care?
In this article, we'll try to break down what professional tax is, why it's taken out, and other often asked questions.
According to the Indian Constitution’s article 246, only the Parliament has the authority to enact legislation governing the Union List, which includes the taxes levied on different types of income. Laws affecting just the state or the concurrent list can be made or changed by the state. The state government collects professional tax, which is a form of tax on an individual's income.
In addition to granting the state government the authority to levy the professional tax, article 267 of the constitution puts some constraints on the process. The state government is limited to collecting a maximum of Rs 2,500 in professional tax from each citizen.
The levying of the expert tax is the responsibility of the Commercial Tax Division. Funds for municipal corporations are accumulated at the state level.
It is the employer's duty to withhold and remit employees' professional taxes to the appropriate authorities. The legislation of the relevant state specifies the slabs that must be used for this purpose. Employers, whether they be corporations, partnerships, or single proprietors, are all considered "professionals" who must pay professional tax. The same laws that apply to everyone else in the state also apply to them.