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How is professional tax calculated?
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August 02, 2006

You have a question about house rent allowance, medical allowance or even a general tax query.

Here's where we step in with our experts, Relax With Tax.

A simple question. Please tell me if I have got it right.

First the taxable income is calculated. This is done by taking into account various deductions.

After that, the tax on taxable income is calculated. From this, tax already paid (TDS) is deducted and the remaining amount has to be paid as tax.

If this is true, why is professional tax calculated as deduction while calculating taxable income?

Should it not be deducted from the tax payable?

- Vinay Joshi

Professional tax or employment tax is a state-based tax. It is allowed as a deduction from the gross income before computing the tax.

Your query probably aims at a point that in case professional tax is allowed as a credit from the net tax payable (instead of the current process of allowing it as deduction from the income), the individual would definitely stand to gain to the extent of at least 66.34% of the amount paid as professional tax.

Your point is valid. But you need to consider the fact that professional tax is not part of direct tax applicable on your income.

Accordingly, there should be a legislative change for allowing the credit for professional tax from the direct tax payable by you.

Got a question for Relax With Tax? Please write to us!

Note: Questions may be edited for brevity. Due to the tremendous response, all queries will not be answered.

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Illustration: Dominic Xavier




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Number of User Comments: 3




Sub: about proffesional tax

I want know details about proffesional tax calculation.


Posted by debakanata





Sub: professional tax

what is the formula of calculating prof tax or on which amt prof tax is calculated at what rate.


Posted by swapnil





Sub: How to calculate Proffesional tax

I want know abt proffesional tax calculation.


Posted by Rupali




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