Professional Tax
PT is a tax imposed by the State Government, is a tax levied on the income earned in any profession and is normally paid by the employer. This is a mandatory tax collection by the state government on all private establishments. The employer is responsible to deduct PT from the salaries of all employees, which is then deposited to the appropriate department in the state government.
PT is dependent on the gross income of the employees. It is a slab amount depending on their gross income, which is deducted monthly from their salary. If the person is not a salaried employee but any other class of employee , he has to pay PT himself rather than the employer deducting from his paycheck.
It is mandatory to obtain PT registration in certain states and have the deductions and pay professional tax for all the employees is a must. Failure to do so may result in penalties and fines that collect over time.
The deductions made by the employer towards salary of employee can be tax deductible and claimed by the tax payer on account of professional tax paid. This deduction will be valid only in the year which the tax was paid by the employees.
Local Authorities and state government are allowed to collect PT on professions, trades and employments.