How is professional tax calculated?

First the taxable income is calculated. This is done by taking into account various deductions.

After that, the tax on taxable income is calculated. From this, tax already paid (TDS) is deducted and the remaining amount has to be paid as tax.

If this is true, why is professional tax calculated as deduction while calculating taxable income?

Should it not be deducted from the tax payable?

- Vinay Joshi

Professional tax or employment tax is a state-based tax. It is allowed as a deduction from the gross income before computing the tax.

Your query probably aims at a point that in case professional tax is allowed as a credit from the net tax payable (instead of the current process of allowing it as deduction from the income), the individual would definitely stand to gain to the extent of at least 66.34% of the amount paid as professional tax.

Your point is valid. But you need to consider the fact that professional tax is not part of direct tax applicable on your income.

Accordingly, there should be a legislative change for allowing the credit for professional tax from the direct tax payable by you.

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