Professional tax slabs across Maharashtra, Karnataka, Tamil Nadu and West Bengal: the 2026 multi-state payroll reset

The most under-managed payroll head in multi-state India

Professional tax is one of those compliance heads where every payroll manager knows the rule applies and almost every multi-state employer has at least one state where the compliance is misaligned. The reasons are structural. Each state has its own PT Act, its own slabs, its own registration form, its own filing cadence, and its own portal. The constitutional cap of ₹2,500 per annum is uniform, but the path to that cap differs widely. A multi-state payroll manager handling employees across Maharashtra, Karnataka, Tamil Nadu, and West Bengal manages four parallel compliance workflows.

For a mid-sized Indian employer with 200 to 2,000 employees across major metros, the PT compliance load is the single most diffuse line item in the statutory calendar. The penalty exposure is low per default but high in aggregate, and PT non-compliance is the most common surprise in payroll due diligence during transactions and IPO readiness reviews.

This post walks through the four major-state slabs, the registration and filing cadence, the penalty exposure, and the multi-state payroll reset every CFO and HR head should run in May 2026.

Related: Payroll Processing Services · Statutory Compliance · Salary Structuring

The constitutional framework and the ₹2,500 cap

Article 276 of the Constitution of India authorises state legislatures to impose taxes on professions, trades, callings, and employments. The article caps the levy at ₹2,500 per annum per individual. The 60th Constitutional Amendment in 1988 raised the cap from ₹250 to ₹2,500. Various state amendments have aligned their slabs to the cap.

The legal incidence is split. The employer is required to deduct PT from employee salary and deposit it with the state PT authority, under the local PT Act. The employer is itself separately registered as a "professional" or "trade" for the entity's own PT liability. The self-employed (CAs, doctors, lawyers, consultants) are individually liable.

Professional tax paid is deductible from salary under Section 16(iii) of the Income Tax Act 1961, computed on actual payment basis. The TDS computation under Section 192 takes the PT deduction into account.

Maharashtra: PTRC and PTEC, the two-registration regime

The Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975 establishes a two-registration regime.

PTRC (Professional Tax Registration Certificate). This is the employer's registration for deducting PT from employee salaries. PTRC is mandatory for every employer with one or more employees subject to PT in Maharashtra. Application is online on the Maharashtra GST portal (mahagst.gov.in) using Form I.

PTEC (Professional Tax Enrolment Certificate). This is the entity's own registration for PT liability on the business itself. PTEC is mandatory for every business, professional, or trade. Application is on the same portal using Form II.

The slabs for employees:

• Monthly salary up to ₹7,500 (men) or ₹25,000 (women): nil
• ₹7,501 to ₹10,000 (men): ₹175 per month
• Above ₹10,000 (men) or above ₹25,000 (women): ₹200 per month for 11 months and ₹300 in February

The annual total is ₹2,500 (₹200 x 11 plus ₹300 x 1).

The filing cadence:

• Employers with annual PT liability above ₹50,000: monthly return on Form III-B by the 21st of the next month
• Employers with annual PT liability below ₹50,000: annual return on Form III by 31 March of the next FY

The PTEC liability for the entity is typically ₹2,500 per annum, paid annually by 30 June.

Penalty. Interest at 1.25 percent per month on unpaid PT. Penalty of ₹5 per day per defaulting employee under Section 11. Late fee of ₹1,000 for delayed return filing.

Karnataka: the ₹25,000 threshold uplift in 2023

The Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 had a long history of ₹15,000 monthly threshold for PT applicability, with the Karnataka Finance Act 2023 raising the threshold to ₹25,000 effective 1 April 2023. The slab is now simpler:

• Monthly salary up to ₹25,000: nil
• Monthly salary above ₹25,000: ₹200 per month, totalling ₹2,400 annual

The employer registration is on the Karnataka Commercial Tax portal (karunadu.karnataka.gov.in) using Form 1. The PT challan is filed monthly on Form 5 on or before the 20th of the following month, with the payment made to the Karnataka Commercial Tax Department.

The entity's own PT (on the business itself, parallel to Maharashtra PTEC) is ₹2,500 per annum, paid by 30 April of every year.

Penalty. Interest at 1.25 percent per month and penalty of 50 percent to 150 percent of the unpaid tax under Section 11. Karnataka has been more aggressive in pursuing PT defaults through follow-up notices and assessment proceedings than most other states.

Related: Karnataka Compliance for IT/ITeS · Bengaluru Payroll Services

Tamil Nadu: half-yearly slabs and the unique structure

The Tamil Nadu Tax on Professions, Trades, Callings and Employments Act, 1992 is structurally different from most other states. The slabs are half-yearly, not monthly, and the filing cadence is half-yearly.

Half-yearly slabs (April to September and October to March):

• Up to ₹21,000: nil
• ₹21,001 to ₹30,000: ₹135
• ₹30,001 to ₹45,000: ₹315
• ₹45,001 to ₹60,000: ₹690
• ₹60,001 to ₹75,000: ₹1,025
• Above ₹75,000: ₹1,250

The maximum half-yearly liability is ₹1,250, totalling ₹2,500 annual.

The filing cadence is half-yearly. The return for April to September is filed by 15 October, and the return for October to March is filed by 15 April of the next year. The PT is deposited along with the return at the Greater Chennai Corporation (for Chennai-based employers) or the relevant municipal/town panchayat office.

Tamil Nadu PT is administered through municipal authorities, not the state commercial tax department. This local administration introduces variance in compliance workflows depending on the city.

Penalty. Interest at 2 percent per month and penalty up to 50 percent under Section 16. The Greater Chennai Corporation actively follows up on PT defaults during property tax verification and trade licence renewals.

West Bengal: monthly slabs with five bands

The West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979 prescribes a five-band monthly slab:

• Monthly salary up to ₹10,000: nil
• ₹10,001 to ₹15,000: ₹110 per month
• ₹15,001 to ₹25,000: ₹130 per month
• ₹25,001 to ₹40,000: ₹150 per month
• Above ₹40,000: ₹200 per month

The annual maximum is ₹2,500, achieved at the top slab over 12 months (with adjustments for the half-year break).

The employer registration is Form III on the West Bengal Commercial Tax portal (wbcomtax.gov.in). The filing cadence is monthly on Form V by the 21st of the following month for high-liability employers, and annually for low-liability employers.

Penalty. Interest at 12 percent per annum (1 percent per month) on unpaid PT, plus penalty up to 50 percent of the tax.

The four-state comparison table

The multi-state payroll reset workflow

For an employer operating across multiple states with PT, the following workflow is recommended.

Step 1: Map the workforce. Identify the state of work location for every employee. For remote employees, identify the state of registered residence or contract location.

Step 2: Registration audit. Confirm that the employer has PTRC and PTEC (or equivalent) in every state where it has at least one PT-liable employee. Register where missing.

Step 3: Slab application by state. Configure the payroll system to apply the correct slab based on the employee's state and monthly salary. Use the women-friendly higher threshold in Maharashtra where applicable.

Step 4: Cadence calendar. Set up a state-wise compliance calendar with the correct filing dates. Monthly returns in Maharashtra (high liability), Karnataka, and West Bengal (high liability). Half-yearly returns in Tamil Nadu.

Step 5: Payment reconciliation. Maintain a state-wise PT challan log with monthly reconciliation against the payroll deductions.

Step 6: Penalty exposure check. Quarterly review of late filings and interest accruals. Pre-emptively settle interest on small delays rather than wait for notices.

Step 7: Audit trail. Retain payment challans, returns, and registration certificates for 8 years (varies by state, conservative threshold).

Common errors KAMRIT sees in payroll audits

• Treating remote employees as taxable in the office location rather than the work location
• Applying the Maharashtra women-friendly threshold to all states (the threshold is Maharashtra-specific)
• Missing the PTEC liability for the entity itself in Maharashtra
• Filing Tamil Nadu PT as monthly instead of half-yearly
• Failing to update Karnataka slab after the 2023 threshold uplift to ₹25,000
• Ignoring the entity own PT liability in non-Maharashtra states (typically a flat ₹2,500 per year)
• Mixing up PT and ESI/EPF jurisdictional rules (PT is state, ESI/EPF is central)

Talk to KAMRIT

KAMRIT's payroll desk runs PT compliance for over 350 multi-state employers, with state-specific registrations, monthly and half-yearly return filings, and dashboard reporting on the compliance position across states. Our managed-payroll engagement bundles PT, EPF, ESI, TDS, and Labour Welfare Fund compliance with a single dashboard. For a multi-state employer evaluating its PT compliance position, we offer a 14-day audit engagement that maps the workforce, reconciles deductions, identifies gaps, and proposes a 90-day reset plan. Fixed-fee engagement starts at ₹35,000 for a 100-employee multi-state setup. Reach out at kamrit.in for a free 30-minute scoping call.

References

1. Constitution of India, Article 276 (cap of ₹2,500 per annum).
2. Maharashtra State Tax on Professions, Trades, Callings and Employment Act, 1975.
3. Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 (as amended by Karnataka Finance Act 2023).
4. Tamil Nadu Tax on Professions, Trades, Callings and Employments Act, 1992.
5. West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979.
6. Section 16(iii) of the Income Tax Act, 1961.