MADCHAD EXCHANGE

Frequently Asked Questions (FAQ)

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1. What is Profession Tax
Profession tax is a tax levied by the State Government on salaried individuals, working in government or non-government entities, or in practice of any profession, including Chartered Accountants, Doctors, Lawyers. Enginneers, consultants, artists etc or carry out some form of business. This form of tax is in practice for a long time and States were conferred the power of leveling the Tax under Clause (2) of Article 276. The Profession tax rates is based on the Income Slabs set by the respective State Governments. However, the maximum Profession Tax that may be levied by any State has been capped at Rs 2500/-. The total amount of profession tax paid during the year is allowed as Deduction under the Income Tax Act.
For Employees, Profession Tax is deducted by the employers from the salary of the salaried employees and same is deposited with the State Government.
For other individuals, they have to directly pay it to the Government or through their respective Local Bodies appointed to do so. The tax has to be collected and deposited as per the timeline provided by the respective State Government. In case, one fails to do so, penalty and late fee would be applicable. The Tax is paid to the Government on Semi Annually basis.