Professional tax being levied by State Government, is different in different states. Every state has its own laws and regulation to govern professional tax of that particular state. However, all the states do follow slab system based on the income to levy professional tax.
Further, Article 276 of the Constitution which empowers State Government to levy professional tax also has provided for a maximum cap of Rs 2,500 beyond which professional tax cannot be charged on any person.
Professional tax is collected by the Commercial Tax Department. The commercial tax department of the respective states collects it which ultimately reaches the fund of municipality corporation.
Person responsible to pay professional tax
In case of employees, an employer is the person responsible to deduct and pay professional tax to the State Government subject to monetary threshold if any provided by respective State's legislation. Additionally, employer (corporates, partnership firms, sole proprietorship etc) also being a person carrying on trade/profession is also required to pay professional tax on his trade/profession again subject to monetary threshold if any provided by respective State's legislation. In such case, employer needs to register and obtain both professional tax registration certificate to be able to pay professional tax on his trade/profession and professional tax enrolment certificate to be able to deduct the tax from his employees and pay. Further, separate registration may be required for each office depending on respective State's legislation.
Persons who are carrying on freelancing business without any employees also required to register themselves subject to monetary threshold if any provided by respective State's legislation.
However, professional tax levy is subject to exemption provided by respective State to certain categories. For example: Parents or guardian of any person who is suffering from mental retardation, blind persons are exempted among others from levy of Karnataka Professional tax.