Professional Tax in Kerala — Employer Registration, Deduction and Monthly Returns

Professional Tax (PT) is a state-level tax levied on professionals, employees and business owners. In Kerala, Professional Tax is governed by the Kerala Panchayat Raj Act and the Kerala Municipalities Act — administered by local bodies (panchayats, municipalities and corporations). Employers must deduct PT from employees' salaries and remit it to the local body. Here is the complete guide for Kerala employers.

Professional Tax in Kerala — Who Pays?

• Employees: All salaried employees earning above the threshold — PT is deducted from salary by the employer and remitted on behalf of the employee
• Professionals/Self-employed: Doctors, CAs, lawyers, architects, consultants — registered with local body and pay PT directly
• Businesses/Traders: Based on gross receipts or the nature of trade — different slabs for different categories

PT Slab for Employees in Kerala (Approximate)

• Salary up to ₹11,999/month: Nil PT
• Salary ₹12,000 to ₹17,999/month: ₹120/month PT
• Salary ₹18,000 to ₹29,999/month: ₹180/month PT
• Salary ₹30,000/month and above: ₹200/month PT

Note: PT slabs vary by local body in Kerala — always verify the current slab notification from your local Panchayat/Municipality/Corporation. The maximum PT under Kerala law is ₹2,500 per year.

Employer Obligations

• Register with the local body (Panchayat/Municipality/Corporation) as an employer for PT deduction
• Deduct PT from employees' monthly salaries based on the applicable slab
• Remit the collected PT to the local body (typically quarterly — by 10th of April, July, October, January)
• File a quarterly return (Form V or equivalent) showing employees, salaries and PT deducted
• Maintain a register of PT deductions for each employee

Annual PT Settlement

An annual return and settlement must be filed with the local body. Some local bodies in Kerala require monthly remittance while others accept quarterly — check with your specific local body.

Section 16 Income Tax Deduction

Employees can claim the PT deducted from their salary as a deduction under Section 16(iii) of the Income Tax Act — reducing their taxable salary income by the amount of PT paid. This deduction is available under both old and new tax regimes.

Conclusion

Professional Tax compliance in Kerala requires local body registration and regular deduction and remittance from employee salaries — a small but mandatory compliance that new employers often miss. SPOTON handles PT registration, monthly remittance and returns for employers across Kerala. Contact us for complete payroll and employer compliance services.