If you take a look at your payslips you will notice a small amount of deduction along with all the HRA, conveyance, and basic salary breakups. This deduction is generally to the tune of INR 200 or so and is called Professional Tax.
A professional tax is a direct tax levied by the government on employees and professionals and the tax rates vary from state to state. Just like the income tax, the professional tax is linked to the income slabs. It is deducted at the source by the employer. It is a nominal tax and never exceeds a few hundred rupees a month. The maximum amount of Professional Tax that any state can impose in India is ₹2500. Further, the total amount of Professional Tax paid during the year is allowed as a deduction under the Income Tax Act.
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