Deduction of half-yearly Profession Tax in Chennai – Part I

Profession tax (PT) is levied by local authorities such as city corporations and municipalities on employees and employers. PT is calculated on the basis of the earned gross salary of employees. In some states (such as Maharashtra and Andhra Pradesh), PT is to be deducted from employee salary and remitted each month to the local authorities while in states such as Kerala and Tamil Nadu PT should be remitted once every 6 months while deduction of PT from employee salary may happen each month or once every six months.

In this post we will focus on issues pertaining to deducting and remitting PT in Chennai where PT remittance should be made to the Chennai Corporation once every six months — typically in October for the first half of the year ending September and in April for the second half of the year ending March. “Year” refers to period starting April 1 of a calendar year to March 31 of the next calendar year.

Currently (Feb 2013), Profession Tax for employees based in Chennai is calculated as per the below slabs.

Salary for the half year in RsProfession Tax for the half year in Rs
Less than or equal to 21,000Nil
21,001 – 30,000100
30,001 – 45,000235
45,001 – 60,000510
60,001 – 75,000760
75,001 and above1095

During a half-year (Apr – Sep or Oct – Mar) if an employee works for an organization in Chennai, the organization should deduct and remit PT as per the above slabs.

Equated monthly PT deduction – a popular but flawed PT deduction logic

Many organizations deduct PT on a monthly basis by way of equal installments across a half –year period. For example, if an employee earns more Rs 15,000 each month (more than Rs 75,000 in a half-year), a sum of Rs 1095 should be deducted towards PT (please see the PT rate table above). Organizations following the equated monthly PT deduction method deduct Rs 182 (Rs 1095/6) each month towards PT in the monthly payroll. At the end of 6 months the organization will have deducted Rs 1095** for PT remittance. All is well.

**Rs 182 x 6 is actually Rs 1092 and not Rs 1095. This rounding-off problem can be easily solved by simply adding Rs 3 to the PT deduction amount during payroll in any of the months during the half-year period.

What happens if the employee does not work for the entire half-year period but leaves the organization at the end of say, 3 months? For example, let us assume that the employee works from 01-Apr-2012 to 30-Jun-2012 during the half-year period.

The company will have deducted Rs 546 (Rs 182 x 3) for the 3 months as per the equated monthly PT deduction logic. For the 3 months, the employee earned Rs 45,000 (this is the half-yearly salary since the employee leaves the organization), and for Rs 45,000 the organization should have deducted only Rs 235 as PT (please see the PT rate table above). In addition, Rs 546, the deducted PT amount, does not fall in any PT slab as specified by the Chennai Corporation. Ideally, the organization should refund Rs 311 (PT deducted in excess) to the employee. In practice, most organizations just remit whatever PT is deducted from employee salary. We have come across instances where PT authorities have questioned the basis of PT deduction when PT amounts do not fall under any PT slab.

There can also be instances when the equated PT deduction logic can lead to under-deduction of PT.

Let us assume that an employee earns Rs 7,000 per month (Rs 42,000 in a half-year period). The PT deduction for a half-year period should be Rs 235 (as per the PT slabs). As per the equated PT deduction logic, the organization will deduct Rs 39 per month (Rs 235/6). If the employee leaves the organization at the end of 5 months, the organization will have deducted Rs 195 as PT. However for an employee salary of Rs 35,000 (Rs 7,000 x 5 months), the organization should have deducted Rs 235. This is a case of under-deduction of PT.

The flaws of the equated PT deduction logic will come to the fore for any employee who does not work the entire six months in a half-year period.

If you are in favour of the equated PT deduction method and argue that you can always adjust the excess or short PT in the final settlement processing if an employee quits before the end of the half-year period, we will simply say that this will not be possible in case an employee absconds or does not have adequate settlement salary to recover the short PT in full.

In other words, the equated PT deduction logic is flawed and is better not followed. Of course, if an organization does not deduct PT each month but deducts PT only once every half year, this problem will not occur. With regard to organizations which follow monthly deduction of PT, we will examine how we can deduct PT in a more scientific manner in each month’s payroll in the next post.

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76 Comments

  1. k sridhar September 11, 2014

    If one staff joined in Aug, the Professional tax to be deducted for two monthssalary only (Aug-Sep) or to be calculate from April to Sep for 1st half of the year.

    reply
    • gautham September 11, 2014

      PT should be deducted on the basis of the salary paid to the new joinee in Aug and Sep.

      reply
  2. Santhanam November 4, 2014

    Is professional tax applicable to all type of employees?

    reply
    • gautham November 9, 2014

      Any person who is employed on salary shall be covered under Professional Tax. The term employee has a specific connotation in law. The Professional Tax rules in Tamil Nadu do not exempt any category of employees.

      reply
  3. RAMADAS December 8, 2014

    professional tax late payment Interest calculation

    reply
    • gautham December 10, 2014

      Not sure what your question is. The late payment interest is specified by the relevant PT authority. You can check with the relevant authority and calculate the late payment interest.

      reply
  4. Neha March 10, 2015

    If I worked for 3 months in Chennai,that is april,may,june and then shifted to maharastra in the same company. Do i need to pay tax for 6 months for tamil nadu and every month in maharashta i.e i need to pay twice for july and aug? as 200 a month as per maharashtra and 1095 as per tamil nadu?

    reply
    • gautham March 19, 2015

      Yes, for the salary you received in Chennai (for 3 months) you need to pay Prof Tax once in Chennai. From July onwards, you will need to pay Prof Tax in Mumbai each month.

      reply
  5. S Bharadwaj July 10, 2015

    Is it mandatory for the company based in New Delhi having its office in Chennai to pay a Professional Tax. According to me, there is no professional tax deducted from one’s salary in Delhi.

    Will you please clarify this doubt?

    S Bharadwaj
    8939070877

    reply
    • gautham July 10, 2015

      Yes, it is mandatory since the company has operations in Chennai.

      reply
  6. Shivali September 4, 2015

    Hi

    I have worked 3 months in Coimbatore and 3 months in Bangalore under same company. How much PT should be deducted for me for 6 months. For each month in Bangalore Professional Tax is 200/-

    Shivali

    reply
    • gautham September 5, 2015

      The PT for Coimbatore (for the 3 month period) must be calculated and remitted as per PT slabs in Coimbatore.The PT for Bangalore must be calculated and remitted as per Bangalore PT slabs.

      reply
  7. Karthik September 8, 2015

    What are all included in “Salary” for computation of Professional tax? Details required urgently.
    Thanking you in advance

    reply
    • gautham September 8, 2015

      The typical definition of salary for the purpose of PT calculation is as follows:

      Salary includes pay or wages, dearness allowance and all other remunerations (perquisites and profits in lieu of salary) as defined in section 17 of the Income Tax Act, 1961.

      However, please note that some states explicitly leave out heads such as Bonus for the purpose of PT calculation. In short, one needs to look at the salary definition as per the statute governing PT in each state.

      reply
      • Karthik September 8, 2015

        Can you please tell me what falls under the term Salary for Tamilnadu? As far as i checked it wasn’t defined

        reply
        • gautham September 8, 2015

          As per the The Tamil Nadu Tax on Professions, Trades, Callings and Employments Act:

          “salary” includes pay or wage, dearness allowance and all other remuneration received by any person on regular basis, whether payable in cash or in kind, and also includes perquisites and profits in lieu of salary as defined in Section 17 of the Income-tax Act, 1961 but does not include bonus in any form or gratuity.

          reply
  8. Rajesh September 8, 2015

    What is due date for deposit of Professional Tax with Bank?
    What is penalty if payment is made after due date?

    reply
    • gautham September 9, 2015

      I presume you are talking about PT remittance in Chennai. The Corporation of Chennai typically accepts PT payments until Sep 30 for the first half and Mar 31 for the second half without imposing any penalty. In case of delayed payments, the Corporation of Chennai imposes a penalty of 1% per month.

      reply
  9. E.SARAVANAN November 26, 2015

    -> IF A COMPANY IS STARTED IN MAY OR JUNE MEANS, THEN THE COMPANY HAS TO PAY PROFESSIONAL TAX FOR THAT 5 OR 4 MONTHS????
    ->WHAT IS THE REGISTRATION PROCEDURE FOR APPLYING PROFESSIONAL TAX FOR A NEWLY OPENED COMPANY….

    REGARDS,
    E.SARAVANAN
    7418689997

    reply
    • gautham November 27, 2015

      -> IF A COMPANY IS STARTED IN MAY OR JUNE MEANS, THEN THE COMPANY HAS TO PAY PROFESSIONAL TAX FOR THAT 5 OR 4 MONTHS????

      Ans: PT should be paid from the commencement of operations.

      ->WHAT IS THE REGISTRATION PROCEDURE FOR APPLYING PROFESSIONAL TAX FOR A NEWLY OPENED COMPANY….

      Ans: Kindly check with the Chennai Corporation in this regard.

      http://www.chennaicorporation.gov.in/rules-procedures/professionTax.htm

      reply
  10. E.SARAVANAN November 26, 2015

    IF A COMPANY IS NOT YET REGISTERED FOR PROFESSIONAL TAX FOR MORE THAN 5 MONTHS MEANS IS THERE ANY PENALTY WILL BE COLLECTED FOR THAT???

    reply
    • gautham November 27, 2015

      Chennai corporation levies interest penalty for delayed PT remittance. Kindly register for PT at the earliest.

      reply
  11. D Lakshminarayanan January 11, 2016

    is professional tax to be deducted from employees on their resignation/superannuation between the two half year period(viz.,August/January).

    Your early reply will help us to decide to recover upon final settlements made between the two half year periods(viz.,August/January).

    reply
    • gautham January 11, 2016

      Yes, PT is to be deducted as part of final settlement processing.

      reply
  12. Shivani January 29, 2016

    Will Prof tax differ in chennai for different locations? based on panchayat and non-panchayat

    reply
    • gautham January 30, 2016

      Prof Tax rates differ from town to town in Tamil Nadu as per the rates mandated by the local panchayat/corporation.

      The whole of Chennai has the same Prof Tax rates.

      reply
      • Shivani February 1, 2016

        I was working in siruseri. they have deducted additional charges from me. Is it Siruseri has diff tax schemes??

        reply
        • gautham February 1, 2016

          Not sure what you mean by “additional charges.”

          reply
          • Shivani February 2, 2016

            for Chennai Prof tax is 1095 right? for me they have deducted 1175. They telling Siruseri will come under panchayat

          • gautham February 3, 2016

            Yes, Siruseri comes under a panchayat.

  13. Karthik K February 2, 2016

    Hi,

    I my company they have deducted every month (Apr’15 to Dec’15) Rs.183/- as PT and in Jan’16 they have deducted Rs.546/- as PT.

    Why they deducted more in Jan month? what is the reason behind this?

    Thanks,
    Karthik K

    reply
    • gautham February 3, 2016

      Not sure about this. Kindly check with your employer in this regard.

      reply
  14. Gajra March 18, 2016

    Hi Gautam,
    How to go for PT registration? What are the formalities? We are Delhi based company and running operations in Chennai. We have contract labor license for Chennai. Please guide.
    Regards
    Gajra

    reply
    • gautham March 18, 2016

      Your organization has to be obtain PTNAN (Professional Tax New Registration Number) from the Corporation of Chennai and start remitting PT for each half-year. Your organization can approach the Corporation office at Ripon Buildings in Chennai for the registration form.

      reply
  15. CHINNA March 21, 2016

    I JOINED ON 4TH OF JAN 2016 AT CHENNAI HP AND THERE AFTER TRANSFERRED TO BLORE. FROM THE SALARY OF JAN 2016 AN AMOUNT OF 1095- IS DEDUCTED AND FROM MY FEB 2016 SALARY ONLY 200- IS DEDUCTED TOWARDS P.T. WHEN I ASKED HR CONCERNED ATBLORE THEY WERE TELLING MY JOINING WAS AT CHENNAI IN JAN 16 HENCE 1095- IS DEDUCTED AND IN FEB 2016 ONLY 200- DEDUCTED IN BLORE.
    ARE CHENNAI HR SUPPOSED TO DEDUCT IN ADVANCE THAT 1095-? FROM MY JAN 16 PAYT? OR WILL I GET BACK MY EXCESS DEDUCTED PT FROM CHENNAI?
    I HAVE BEEN FOLLOWING WITH BLORE HR SINCE TWO MONTHS BUT NO PROPER RESPONSE

    reply
    • gautham March 21, 2016

      If the gross salary you received for Jan 2016 in the Chennai office was more than Rs 75,000, the PT deduction of Rs 1095 is correct. Else, the deduction is incorrect.

      reply
  16. PRIYANKA SINHA April 1, 2016

    I am Priyanka, I have worked in other company till 3rd Feb 2016 in chennai and P Tax was deducted pm there. I have joined new company from 13th Feb 2016 in chennai only.
    My salary is coming under the slab 0-75000 i.e. 1095 .

    Now my present (new) company has deducted Rs.183 from Feb salary and Rs.912 from Mar 16 salary against P Tax of six months.

    Am I liable to pay two times P Tax just because I have changed company in same city or it can be refunded from P Tax dept?
    Please reply.

    reply
    • gautham April 5, 2016

      The law states that a person should not be subjected to PT twice in the same half year just because the person has changed employment. However, not many employers are aware of this. Employers deduct PT as per the salary they pay to employees and do not bother to check if the employee has already paid PT for the same period in an earlier employment. Also, there are no clear guidelines on how employers should handle such cases.

      There is no defined process to seek a refund from Chennai Corporation. You can probably write to the Corporation authorities and request a refund if you can establish that PT has been deducted twice for the same period in Chennai.

      reply
  17. Linkeshwar June 27, 2016

    Does professional tax differ for different locations within same state. Maximum professional tax in Tamil Nadu is 2190. But I was Charged 2570 when working in Mepz Sez and 2190 when working in non SEZ. Why professional tax is charged higher when working in Special Economic Zone (SEZ). Can anyone please clarify this in detail ?

    reply
    • gautham June 27, 2016

      Professional tax (PT) differs from place to place within Tamil Nadu. The municipality/panchayat under which an SEZ falls may charge PT which is different from the PT charged by the Chennai Corporation.

      reply
      • Linkeshwar June 28, 2016

        Thanks for the info 🙂

        reply
  18. Soorej Kc July 25, 2016

    I am a physically handicapped employee working in lic now at chennai
    my disability percentage is 60
    can i get exemption from pt

    reply
    • gautham July 26, 2016

      The following category of employees is exempted from PT:

      Physically disabled persons with total disability in one or both the hands or legs, spastics
      totally dumb or deaf persons or totally blind persons.

      Provided that such physical disability shall be duly certified by a registered medical practitioner
      in the service of the State Government not below the rank of a Civil Surgeon.

      http://www.scd.tn.gov.in/gos/emp_act_1991.pdf

      reply
  19. shanthi August 31, 2016

    my salary is 6000 per month but they deduct 295 as professional tax ………but the real tax for 6months is 235…….how they did this

    reply
    • gautham September 14, 2016

      Kindly check with your employer on the basis of their PT calculation.

      reply
  20. M VINOD KUMAR December 21, 2016

    Hi Sir,
    We have client in Chennai how much the slabs now in chennai and Interest & Penalties applicable in professional Tax now we can make the payment please give the information

    reply
    • gautham December 21, 2016

      1. Currently (Dec 2016), Profession Tax for employees based in Chennai is calculated as per the below slabs.

      Salary for the half year in Rs

      Less than or equal to 21,000 – PT Rs 0

      21,001 – 30,000 – PT Rs 100

      30,001 – 45,000 – PT Rs 235

      45,001 – 60,000 – PT Rs 510

      60,001 – 75,000 – PT Rs 760

      75,001 and above – PT Rs 1095

      During a half-year (Apr – Sep or Oct – Mar) if an employee works for an organization in Chennai, the organization should deduct and remit PT as per the above slabs.

      2. Delayed remittance of PT attracts 1% per month interest.

      3. Please make the payment to “Revenue Officer – Corporation of Chennai” quoting your organization’s PTNAN.

      reply
  21. Kadhirvel March 13, 2017

    Hi Sir,

    I have switched my company on 30th Nov from OMR to chengalpattu SEZ. my previous company has already deducted 1095 twice one in first half of FY and another in Final settlement. my New company also deducted rs.1095 in Jan month salary which is also current FY. so i have been deducted thrice in same FY.How do i can get refund of this.

    reply
    • gautham March 18, 2017

      There is no way of getting a refund from the Corporation of Chennai. You can check with the Corporation of Chennai on this.

      reply
  22. hemant Singh adhikari March 24, 2017

    Hi we have made DD in favour of revenue office the greater chennai corporate will they accept the DD or not

    reply
  23. Rama April 4, 2017

    My Daughter’s Physically Disabled Certificate Can i Get Exemption in Professional tax in Tamil Nadu Govt. If yes Pl provide the Government Order No & Date for the
    Claim.

    Awaiting your reply through my E-Mail.

    reply
    • gautham April 5, 2017

      The employee should be physically disabled in order to avail PT exemption.

      reply
  24. liya April 5, 2017

    hi i took 4 month leave for maternity june2016 to dec2016. for that 4 month I was in LOP. I re joined on jan2017 and they deducted professional tax of 729 rupees on mar2017. whether they will deduct profession tax for LOP months also?

    reply
    • gautham April 5, 2017

      LOP does not matter. PT is calculated on the basis of the earned salary. If your earned salary (after LOP) during the 6 month period falls under a slab which corresponds to a certain PT amount, you are liable to pay PT.

      In your case, your PT should have been calculated on the basis of the salary you earned from Jan 17 to Mar 17.

      reply
  25. Aswathanarayana Setty August 14, 2017

    I am having barber shop (hair cut saloon).
    I want to know about professional tax.

    reply
    • gautham August 17, 2017

      What is that you wish to know? Can you please ask a specific question?

      reply
  26. Bala August 14, 2017

    Hello Sir,

    I have worked one company at Chennai till June 7 th ,2017 & deducted my PT Rs.1095 from June month final settlement .My new company located at Madurai and they are deducting PT again this month RS.1220.I have checked with account department and they explained both are different paying regions and must have to be paid. Is it right?.

    I have explained with accounts department ready to pay difference amount Rs. 125 (1220-1095). Please clarify which one is right. I’m waiting for your valuable answer. If I’m right please provide supported documents for further clarifications.

    Thanks & Regards,
    Balasubramanian
    9789688548

    reply
    • gautham August 17, 2017

      This is an interesting question. Section 3 of THE TAMIL NADU TAX ON PROFESSIONS, TRADES, CALLINGS AND EMPLOYMENTS ACT, 1992 states:

      3(4) Where a company or person proves that it or he has paid the sum due on account of the tax levied under this Act or under any other Tamil Nadu Act or any tax of the nature of a profession tax imposed under the Cantonments Act, 1924 for the same half year to any local authority or cantonment in the State of Tamil Nadu, such company or person shall not be liable, by reason merely of change of place of business, exercise of profession, trade, calling or employment or residence, to pay the tax to any other local authority or cantonment authority more than the difference between such sum and the amount to which it or he is otherwise liable for the tax for the half year under this Act.

      In other words, if you paid Rs 1095 towards PT while in Chennai and moved to Madurai where the PT for the half-year is Rs 1220, you need to pay nothing more than Rs 1220 – Rs 1095 towards PT in Madurai for the same half-year.

      However, there is nothing explicit in law which states that the second employer can deduct zero or a reduced PT amount from an employee’s salary if the employee had PT deduction for the same half-year from an earlier employer. Hence, most employers simply deduct PT in full.

      The law provides for a refund of PT in case of excess deduction. Section 22 of the Act states,

      22. Refunds

      The executive authority shall, on application, refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him. The refund may be made either by cash payment or, at the option of the person, by deduction of such excess from the amount of tax or interest or penalty, due in respect of any other period.

      If the employer has already deducted and remitted PT, you can check with the Madurai authorities to see if you can receive a refund.

      reply
  27. Vinod September 6, 2017

    We have deducted the Tambaram (Tamil Nadu) PT monthly basis. In august month we need to deduct the PT along with September or September we can deduct monthly. Request you to clarify the same. Thanks

    reply
    • gautham September 7, 2017

      You can deduct monthly. However, you need to remit PT for the first half by 30th September.

      reply
  28. Devnder kumar September 21, 2017

    Dear Sir/Madam,

    Could you please confirm whether company tax amount of Rs. 1000 is applicable for all establishment please share me the term & conditions

    reply
    • gautham October 30, 2017

      The company tax referred to in our blog is for organizations which are based in Chennai. Kindly check with the local authorities of the place where your organization is present in this regard.

      reply
  29. Radhakrishnan November 4, 2017

    Dear Sir, iam working in a private concern and my gross salary is Rs.15000/- but due to my health condition i use to work only 10 – 15 days a month and my take home salary is around Rs.10000/month. how much i have to pay PT amount for six months. (1095/6 months)

    reply
    • gautham November 16, 2017

      If your total salary during a six-month period exceeds Rs 75,000, your PT liability for the 6 month period shall be Rs 1095.

      reply
  30. Lavanya December 7, 2017

    Hi sir, I just joined in a new company in chennai, my current company is not registered for PT. Our company is establised in 2006. Kindly suggest.

    reply
    • gautham January 5, 2018

      Suggest what? Please rephrase the question.

      reply
  31. sujith January 4, 2018

    Sir the Above mentioned example in your article for Monthly deduction leading to short deduction .
    The Same Issue we are facing , so what is your conclusion for this .

    Thanks and regards
    Sujith

    reply
  32. Jennin March 29, 2018

    Hi I’ve started working from Feb, my company has deducted a total of 1095, for Feb and March, is this correct or should they have deducted only 183*2?

    reply
    • gautham April 2, 2018

      If you received more than Rs 75,000 as salary for Feb and Mar, your company would have deducted Rs 1095. In such a case your PT liability is not Rs 183 x 2.

      reply
  33. madu July 1, 2018

    Dear Sir,

    I have resigned from a IT company in chennai during March 2018. While making the final settlement ( encashment of earned leave/PL) during April 2018 they have deducted professional Tax of Rs.1094.00. I have joined in a new company in Mumbai during March fourth week. They are also deducting the PT as per Maharashtra Act from April 2018. Can I get the refund of Rs.1094- being paid to TN as I am already start paying PT to Maharashtra state.

    reply
    • gautham July 3, 2018

      No, you cannot. The PT you paid in Chennai was for the period Oct to Mar which the PT deducted in Mumbai is for Apr.

      reply
  34. Sam March 28, 2019

    I joined on 18th Feb 19 in the company. so how much PT they will deduct for me.
    My Salary is >75000

    reply
    • gautham April 1, 2019

      I presume your organization is located in Chennai.

      PT for the half-year: Rs 1,250

      reply

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