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Professional tax exemption

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Sandeep

MBA

21 Points Posted on 16 October 2014

Hello Everyone,

I got a query in regard to the professional tax exemption under sec 16 (iii), I understand that professional tax exemption should not exceed Rs 2500 p.a for any state in a given financial year, even if we project the amount for the year.

If an employee transfer from one state to other, like employee moving from Bangalore to Chennai or Vice- versa even in that case exemption should be still restricted Rs 2500.

Please advise ,if my understanding is right.

Regards

Sandeep

Replies (1)

Deepak Gupta

CA Student

8353 Points Posted on 16 October 2014

The limit of Rs. 2,500/- applies in respect of total amount payable in respect of any one person to the State by way of professional tax.
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But, u/s 16(iii) of the Income Tax Act, 1961, there is no limit of deduction.
“a deduction of any sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of article 276 of the Constitution, leviable by or under any law.”
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Hence, deduction shall be allowed only on paid basis, irrespective of the year and amount.