Question

The maximum limit placed by the Constitution on levy per annum of Profession Tax is
1. Rs. 5,000
2. Rs. 2,500
3. Rs. 1,250
4. Rs. 2,000

Answer 1

Correct Answer - Option 2 : Rs. 2,500

The correct answer is Rs. 2,500.

• The upper limit has been set to INR 2,500 per annum per individual. It is the maximum amount of professional tax a State Government can levy.
• Profession Tax
  • Professional tax is a tax that a state government levies on any individual who earns income through any medium.
  • Professional tax is not just for professionals but for all individuals.
  • The list includes all kinds of individuals from all professions, trades callings and employments and trades.
  • The professional tax appears on the deduction side of a payslip. It is around INR 200.
  • It is the amount of professional tax a State Government can levy.
  • The upper limit has been set to INR 2,500 per annum per individual.
  • Professional tax is deducted under Section 16 (iii) of the Income Tax Act, 1961.
  • The professional tax that an employee pays is allowed as a deduction from their gross salary, while filling their income tax returns.