Professional Tax in India: Who Pays, Registration and Monthly Filing

Professional tax in India is a state-level tax on salaried people, professionals and traders. For employees, the employer deducts it from salary and pays it to the state government, so an employer must register in each state where staff work and levy it by that state's slab. Registration, return forms and due dates are set by each state, and they change by notification. Always confirm the current figures on the state portal.

Who this is for and what you will have

This is for small business owners, HR and payroll staff, and accountants who run payroll in India and want to know what professional tax obligations look like. By the end you will understand how the obligation arises, what registration involves, how the monthly cycle works, and how to check the state-specific details that this article deliberately does not guess at. Karnataka and Maharashtra are used as examples because their government portals document the process. Information on those portals was checked in October 2026, and some pages could not be opened, which is noted below.

How professional tax works

Professional tax is a state subject. Each state that levies it has its own legislation, schedule of rates, registration process and filing rules. Three principles carry across the states that charge it:

• It is a state tax paid where the employee works. Karnataka's professional tax FAQ states that it is paid to the state where employees work, even if salaries are paid from another state's head office. A company registered in one state with staff in another may therefore have to register in both.
• The employer deducts and remits. For salaried employees the tax is deducted from salary by the employer and paid to the state. Karnataka's portal says employers must deduct professional tax even if they employ only one employee, and that directors are liable if they receive a monthly salary.
• Slabs and exemptions vary. Rates depend on the monthly salary or wage and on the state, with exemptions for categories of people. These are revised by amendment, so an old table found online may be wrong.

Not every state levies professional tax, and secondary websites disagree about some states. Treat any list as a starting point and confirm with the state's commercial tax or labour department.

Example one: Karnataka

Karnataka documents its process on the Professional Tax portal (ptax.karnataka.gov.in) and the Commercial Taxes department site.

Registration

According to the portal FAQ, employers register on the e-Prerana system using a PAN or TAN, and registration is a one-time process. The steps described are:

1. Choose the option New RC request.
2. Enter the PAN or TAN and the name as it appears on the PAN card.
3. Select the PT office and enter your mobile number.
4. Verify the OTP and set a password.

If the system says you are already registered, log in with your existing credentials. If it reports an invalid PAN or TAN, check the number and the name you entered. Forgotten passwords can be reset through an OTP to the registered mobile number, and the mobile number and email can be changed through the Amendment option.

Slab and exemptions

The portal states that salaried individuals with a monthly gross income of less than Rs 25,000 are exempt, with effect from 1 April 2023. It also lists exemptions for categories such as blind, deaf and mute persons, people with roughly 40 percent permanent disability, and certain armed forces members. Ex-servicemen are liable if their salary is Rs 25,000 or more. A notice on the employer page says that for February 2026 the tax was to be deducted at Rs 300 per employee rather than Rs 200, under a notification dated 15 April 2025. The notice does not spell out the full slab, so confirm the amount for each month on the portal before running payroll.

Monthly return and payment

The FAQ says deduction and payment are due by the 20th of the following month. The steps for filing a return are to select the month, file the return, make the e-payment, submit the return, and then download or print it (Form 5-A). A return can be revised only 24 hours or more after the original submission. Payment modes listed include net banking, debit card, credit card, UPI and cheque or demand draft. If a payment fails during a system shutdown, the verify e-payment option shows the status of failed entries.

The department's notifications page also lists occasional one-off extensions of the payment date (for example, one in May 2026), so treat the 20th as the standard rule and check notifications for exceptions. The FAQ does not address interest or penalties.

Example two: Maharashtra

Maharashtra administers professional tax through the Goods and Services Tax Department's portal at mahagst.gov.in under the Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975. The department's pages indicate that registration, payment and return filing are on its new portal, that the employer registration is called a PTRC and the enrolment for others a PTEC, and that forms include Form 1 for registration, Form III(B) for the e-return of employers from 1 April 2023, and the MTR-6 challan for payment.

Several of the department's pages, including the employer returns page and the current rate schedule PDF, could not be opened when this article was prepared, so it does not state the current Maharashtra salary slabs. Download the latest Profession Tax rate schedule from the department's "Profession Tax and Other Rate Schedule" page.

The department has also issued time-limited relaxations, for example for registration and returns due in March 2026, and a trade circular on exemption from late fee for the March 2026 return. These illustrate why you should read the department's What's New section before each filing cycle.

Step by step: setting up professional tax for your business

1. List where your employees work. Include remote staff, branch offices and project sites. Tax follows the work location, not the company's registered office.
2. Check whether each state levies it. Look on the state government's commercial tax, labour or finance department site. Do not rely on a blog list.
3. Register as an employer in each state that does. Use the state portal, and keep the registration certificate and number. In Karnataka this is done on e-Prerana with PAN or TAN.
4. Load the state slab into your payroll software. Whether you use Tally, Zoho Payroll or another tool, set up a separate professional tax rule per state, with the exemption threshold, the monthly amount and any special-month amount.
5. Deduct in every payroll run. Deduct from eligible employees, including a director who draws a salary where the state's rules require it.
6. File the return and pay before the due date. Use the state's e-payment route and download the return or challan as proof.
7. Reconcile. Compare the total deducted in payroll with the amount paid for the month.

Verification

• The registration certificate shows the right legal name, state and registration number.
• Payroll shows a deduction for each eligible employee, and none for employees below the exemption threshold.
• The amount paid on the portal equals the total deducted for the month.
• You have a downloaded return or acknowledgement for every month.

Troubleshooting

• Portal says the PAN or TAN is invalid (Karnataka). Check the number and the name exactly as on the PAN card.
• Portal says you are already registered. Log in with the existing credentials, and reset the password by OTP if needed.
• Payment failed but the bank was debited. Use the verify e-payment option on the Karnataka portal to see the status of failed entries before paying again.
• Return needs correction. In Karnataka a return can be revised only after 24 hours from the original submission.
• Portal pages or registration are temporarily unavailable. States sometimes issue relaxations during migrations, as Maharashtra did in March 2026. Read the department's circulars before assuming a penalty applies.
• Unsure whether a state levies the tax. Ask the state's department in writing and keep the reply with your compliance file.

Checklist

• A sheet listing each state, registration number, portal link, due date and responsible person.
• Payroll rules per state, reviewed each April and whenever a notification changes slabs.
• Reminder set for the due date, with a margin for portal downtime.
• Monthly reconciliation of payroll deductions with payments.
• New hires and transfers checked for work state before their first payroll.

For the other employer registrations most Indian businesses handle, see /blog/pf-esi-registration-employer-india-steps, and for income tax deducted from salary, see /blog/tds-on-salary-section-192-employer-guide.

References

• Karnataka Professional Tax portal: employer FAQ
• Karnataka Commercial Taxes department: Profession Tax notifications
• Maharashtra GST Department: Profession Tax and Other Rate Schedule
• Maharashtra GST Department: Profession Tax and Allied Acts forms
• Maharashtra GST Department: Profession Tax and Allied Acts trade circulars