HR & payroll glossary

What is PT?Professional Tax

Professional Tax is a state-levied tax on employment, deducted from salary by employers in states that impose it, capped at ₹2,500 a year by the Constitution.

Definition

Professional Tax is levied by state governments under Article 276 of the Constitution, which caps it at ₹2,500 per person per year. Slabs, deduction months and filing frequency differ by state, and several states and union territories do not levy it at all.

How it works

The employer deducts PT from salary according to the slab for the state where the employee works.
Some states vary the amount by month, for example a higher deduction in February or March so the annual total reaches the cap.
Employers register, deposit and file PT returns with the state authority on the state's schedule.

Why HR and payroll teams care

A company with offices in several states runs several PT regimes at once. The work location on the employee record, not the head office, decides which slab applies.

Example

Two employees, same salary, different states

Employee A works in a state that levies PT: the state slab is deducted each month.
Employee B works in a state with no PT: nothing is deducted.
The payroll must pick the slab from each employee's work location.