Professional tax is a state tax, which is levied by the state government. Professional tax can be divided into two parts namely Employer Professional Tax (PTEC) and Employee Professional Tax (PTRC). Though both the taxes are deposited with the government by the employer only, there is a difference in nature.
Employer Professional Tax (PTEC) is a fixed amount that is to be paid by the employer as his professional tax e.g. in the state of Maharashtra the professional tax payable by the employer or business (PTEC) is Rs. 2500/- per year. Employee Professional Tax (PTRC) on the other hand depends upon the monthly earnings of the employee. The employer deducts a certain amount from the salary of his employer every month and deposits the same with the state government. The maximum professional tax for the year in case of employee (PTRC) cannot exceed Rs. 2500/-.
Professional tax has been levied by the state governments of Maharashtra, Gujarat, Karnataka, Andhra Pradesh, Chhattisgarh, Kerala, Orissa, Meghalaya, Tamil Nadu, Assam, Tripura, Madhya Pradesh, and West Bengal.