Why is Profession Tax so low when compared to the other taxes?

If you observe, the Government has increased every tax, be it Income Tax, GST, Property Tax, etc., over the years, but not the Profession Tax (PT) and it remains abysmally low. Any employee getting Rs.15,000 per month or Rs.15,00,000 per month, pays just Rs.200 per month as PT.

What stops the Government from increasing PT for higher income earners to, say from Rs.200 to Rs.1000 per month?  Shouldn’t  it be higher the income, higher the taxes? Those who earn higher salary can afford to pay higher PT. Make sense, right?

There is an issue to increase PT.

Profession Tax is levied by State Governments under the powers granted in Article 276 of the Constitution of India. As per Article 276 (2) –

The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed Rs.2500 per annum

Hence, the State Governments are not increasing Profession Tax. Or else, by now, they would have increased it from Rs.200 to Rs.2000 per month. (Poor Government – their hands are tied now)

B E Kumar Prasad

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 25+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional and Registered Valuer (F&SA).Prasad welcomes your comments and questions. Please email him at [email protected]

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