The tax your state levies on salaries and on practising a profession. An employer registers to deduct it, and a business owner registers to pay their own. Most need both.
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Who levies it, who pays it, and the two separate certificates most businesses end up holding.
Professional tax is levied by a state government on income earned from a salary, a trade or a profession. Chartered accountants, company secretaries, lawyers, traders and employers all come within it, and the amount is set by a slab that each state decides for itself.
Where an employee is concerned the tax is deducted from their salary by the employer and paid over to the state, and the amount deducted is allowed as a deduction when the employee computes their own taxable income.
Because it is a state levy, both the rate and the way you register differ from one state to the next, and the tax does not exist at all in the states that have not enacted it. What is common everywhere is that there are two registrations rather than one, and which of them applies to you depends on whether you are paying your own tax, deducting somebody else’s, or doing both.
The rules differ by state, so the first thing we establish is which certificate you actually need.
Professional tax is not levied in every state. Where a business has more than one place of work, a separate application is made to each authority.
The Professional Tax Enrolment Certificate. This is the one you take to pay your own professional tax as the business owner or the professional.
The Professional Tax Registration Certificate. This is what lets you deduct the tax from your employees’ salaries and pay it over to the state.
A business with employees owes its own tax as well as the tax it deducts, so it holds both certificates.
A separate application is made for every additional place of work, to the authority for that jurisdiction.
The state Act makes registration compulsory once you employ staff or start practising. Holding the certificate is what keeps the business running lawfully in that state.
Delay in registering attracts a penalty of ₹5 a day, late payment 10% of the tax, and a late return ₹300. Registering on time protects the employer and the employee alike.
The tax is a slab based on gross income and is capped at ₹2,500 a year by the Constitution, so the sum is nominal. What costs money is not paying it.
Professional tax is one of several a new business picks up in its first month. These are the five that come up most often.
| Attribute | Professional Tax | GST Registration | Importer Exporter Code | Shop & Establishment | MSME / Udyam |
|---|---|---|---|---|---|
| Do you have to register | |||||
| Employers and professionalsAnyone earning from a salary, a trade or a profession in a state that levies the tax. An employer registers to deduct it from salaries; a professional or a business owner registers to pay their own. | Suppliers over the thresholdAny business supplying goods with an aggregate turnover over ₹40 lakh, or services over ₹20 lakh. In the special category states those figures are ₹20 lakh and ₹10 lakh. Several categories have to register whatever their turnover. | Importers and exportersAny business importing into or exporting out of India for commercial purposes. Import or export for personal use, and consignments moved by a government department or a notified charity, are outside it. | Every commercial premisesShops, offices, hotels, restaurants, cafes, warehouses and places of public amusement. It attaches to the premises, not to a headcount, so a business with no employees still needs it. Factories are outside it, because they are covered by the Factories Act, 1948. | Micro, small and medium enterprisesAny enterprise within the investment and turnover limits for its class. Wholesale and retail traders were brought back in from 2021 and are eligible. | |
| Mandatory where leviedCompulsory in the states that have enacted it, and not applicable at all in the states that have not. An employer generally has to register within 30 days of taking on staff. | Mandatory over the thresholdCompulsory once you cross the turnover limit or fall into a specified category. Below it, registration is voluntary, and many suppliers take it anyway to be able to pass on input tax credit. | Mandatory to tradeThere is no penalty for not holding an IEC. There is simply no import or export without one, and no way to clear a shipment. | MandatoryCompulsory in most states within 30 days of the business being set up, and each branch registers separately whatever the jurisdiction. | VoluntaryNothing requires an enterprise to register. It is taken for what it unlocks: collateral-free lending, the protection against delayed payments, and the fee rebates. | |
| Who runs it | |||||
| State governmentEach levying state sets its own slabs and its own filing calendar, collected through the state commercial tax department or the municipal corporation. | Central and stateAdministered jointly. On a sale within a state the tax splits into CGST for the centre and SGST, or UGST in a union territory, for the state. On a sale between states, IGST is levied instead. | DGFTThe Directorate General of Foreign Trade, under the Ministry of Commerce and Industry. One code per PAN, valid for every branch of the entity. | State or municipalThe state labour department in most states, and the municipal corporation in some, including Maharashtra and Gujarat where it is issued as a Gumasta licence. | Ministry of MSMECentral, through the Udyam Registration portal. The registration draws turnover and investment figures from your PAN and GST records rather than from a declaration. | |
| State Professions Tax ActsEnabled by Article 276 of the Constitution, which is also what caps the tax at ₹2,500 a year. | CGST Act, 2017Together with each state’s own GST Act. | Foreign Trade Act, 1992The Foreign Trade (Development and Regulation) Act and the Foreign Trade Policy. | State Shops ActsA separate Shops and Establishments Act in each state, with its own rules. | MSMED Act, 2006The Micro, Small and Medium Enterprises Development Act, and the 2020 notification that replaced Udyog Aadhaar with Udyam. | |
| What you owe afterwards | |||||
| YesMonthly or annually, depending on the size of the liability and on the state’s own rules. | YesMonthly or quarterly returns depending on turnover and the scheme you are in, plus an annual return. A registered person with nothing to report still files a nil return. | NoNo return is prescribed. See the row below, which is not the same thing. | NoNo return, but registers of employment, wages, deductions, fines, leave and holidays have to be kept at the premises and produced on inspection. | NoNo return. The classification updates itself each year from the ITR and GST data filed against your PAN. | |
| PermanentHeld for as long as the business operates in the state. A separate registration is needed for each additional place of work. | PermanentThe GSTIN does not expire and is not renewed. A casual taxable person or a non-resident is the exception: theirs is issued for the period applied for, up to 90 days, and can be extended once. | LifetimeThe code itself is permanent and is never re-applied for. It can be surrendered, and it can be deactivated, as the next row explains. | Varies by statePerpetual in some states and issued for a fixed term in others, so the renewal cycle depends on where the premises is. Closing the business has to be notified within 15 days. | PermanentValid for as long as the enterprise exists, with no renewal. The class it sits in can move up or down as the figures change. | |
| Not requiredNothing is confirmed separately; the returns and the payments do that job. | Not requiredNothing is confirmed; the returns do that job. | Required, every yearAn IEC has to be updated or confirmed online between April and June each year, even where nothing about the business has changed. An IEC that is not confirmed is deactivated, and it stays deactivated until it is updated. | Not requiredNothing is confirmed yearly, though a state that issues a fixed-term certificate expects a renewal before it expires. | Not requiredNothing to file. Linking your PAN and GSTIN at registration is what keeps the classification current. | |
| Next step | Get started | Know more | Know more | Know more | Know more |
Swipe the table sideways, Professional Tax stays in view. Open any attribute to read the detail behind all 5 answers.
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Four items. Which of them applies depends on how the business is constituted.
A self-attested copy of the ID proof of the proprietor, partners or directors.
A self-attested copy of the address proof of the proprietor, partners or directors, and the Shop and Establishment certificate if you hold one.
Three passport size photographs of the proprietor, partners or directors.
The MoA and AoA of the company, the LLP agreement or the partnership deed, with the registration certificate where there is one.
Step 01
Step 02
Step 03
Subject to government processing time.
Up to fifteen working days. The application is filed inside the first week; the rest sits with the department.
1 of 15 working days
3 of 15 working days
10 of 15 working days
1 of 15 working days
Subject to government processing time.
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The owner of the business or the professional. An employer deducts the tax from their employees’ salaries according to the state’s slab and pays it over to the government before the 15th of each month, or of each quarter where that applies.
The Professional Tax Enrolment Certificate, or PTEC. It is taken by a business owner or a professional to pay their own professional tax.
The Professional Tax Registration Certificate, or PTRC. An employer takes it when staff are appointed, and it is what allows the tax to be deducted from their salaries.
It has to be obtained within 30 days of employing staff.
It is levied by a number of state governments, among them Maharashtra, Karnataka, Gujarat, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana, Kerala, Madhya Pradesh, Bihar, Punjab, Assam, Odisha, Meghalaya, Tripura and Sikkim.
It does not exist in the states that have not enacted it, so the first question on any registration is which state’s Act applies to the place of work.
₹2,500 a year. That ceiling is set by Article 276 of the Constitution and no state can go above it.
The tax itself is a slab based on gross income and is deducted from the employee’s salary each month.
Yes. Where you have more than one place of work, a separate application is made to the authority for each jurisdiction.
Three separate ones, and they run alongside each other:
For anyone enrolled before 31 May in a year, by 30 June. Anyone enrolled after 31 May pays within a month of enrolling.
Employers file a return alongside the payment of the tax deducted.
In some jurisdictions, yes. In Ahmedabad, for example, both have to be obtained together, and in a few places the Shop and Establishment registration is a pre-requisite for this application.
It depends on where the premises is, so the state law has to be checked before the application is made.
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We work out which certificate applies to you before anything is filed.
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