What is Profession Tax
- Profession tax is a tax that must be paid by a person to the state government.
- It is a tax on the income earned by any person who is carrying out any profession in that state.
- Now, of course, every person who has worked hard for his money will ask before giving away his sweat stained income, “I work for the money and hand it over to you? That’s rich!”
- This tax is like the maintenance we pay to an apartment association in order to maintain and repair the wear and tear. The government uses the money collected to maintain the roads that take you to your workplace, maintain the facilities that supply you electricity and water etc.
Why you have to pay the Profession Tax
Now the next question would naturally be “I already pay income tax!” Well that’s true. And this is why the whole premise of this tax has been the eye of a political storm every budget session. But the optimist in me would take away from these as a saving grace
- a) This tax is fixed. So unlike income tax, where the tax is a percentage of your income, here at least if my income goes up, my tax will not go up.
- b) The tax amounts are very low. As of now, whatever is your income, the tax cannot exceed Rs.2500, and in most cases are as low as Rs.200.
- c) The amount I pay for this tax can be used as a “tax deduction”. That is, if my income is Rs.1000 and the profession tax is Rs.200, then when I am calculating the main income tax, my income will be Rs.1000 minus Rs.200. That is I pay tax only on Rs.800.
Also, for salaried people, they don't even have to bother paying. The employer will deduct while paying the net salary, and will have to take the trouble of filing it with the government and giving you a receipt.