Question: Is Professional Tax Included In CTC?

How is professional tax deducted from salary?

Professional Tax The maximum amount of professional tax that can be levied by a state is Rs 2,500.

It is usually deducted by the employer and deposited with the state government.

In your income tax return, professional tax is allowed as a deduction from your salary income..

Which is better CTC or gross salary?

Gross salary is the amount after the EPF and gratuity are subtracted from the CTC. Basically, the remuneration paid before deducting the income tax, professional tax, and other deductions. It is inclusive of bonuses, overtime pay, paid holiday amount, and other differentials.

What is the CTC salary?

Cost to companyCost to company (CTC) is a term for the total salary package of an employee, used in countries such as India and South Africa. It indicates the total amount of expenses an employer (organisation) spends on an employee during one year.

How is monthly CTC calculated?

CTC = Direct Benefits + Indirect Benefits + Savings ContributionsDirect Benefits refer to the amount paid to the employee monthly by the employer which forms part of his/her take-home or net salary and is subject to government taxes.Indirect Benefits refer to the benefits that employees enjoy without paying for them.More items…•

What is HRA salary?

The amount employees receive from the employer as a part of the paid salary is called HRA (House Rent Allowance). HRA offers tax benefits to the employees for the amount paid by them for accommodations every year. … You can avail this exemption only if you live in a rented accommodation.

How is professional income calculated?

For professionals, Government has introduced a new scheme of presumptive taxation (Section 44ADA), under which professionals can file their return declaring 50% of their gross receipts (which must be up to ₹50 lakhs) as income, and after deducting section 80 deductions, professionals need to pay tax on balance total …

What is the calculation of professional tax?

Which states impose professional tax and what are the tax slabs?StateIncome per MonthTax Rate/Tax Amount (per month)MaharashtraFrom Rs. 7,500 to Rs. 10,000Rs. 175 (for male)Rs. 10,000 onwardsRs. 200 for 11 months + Rs. 300 for 12th monthTelanganaUp to Rs. 15,000NilRs.15,001 to Rs.20,000Rs. 15028 more rows

What is included in CTC?

The CTC includes all the elements of a salary structure – basic salary, House Rent Allowance (HRA), Basic Allowance, Travel Allowance, Medical, Communication, Provident Fund, Pension Fund, and or any incentives or variable pay. … The entire amount of your basic salary is included in your take-home salary.

Is income tax calculated on CTC?

Though his CTC is Rs. 7 lakhs, he is liable to pay tax only on Rs. 2,85,800, after all permissible deductions. Let us calculate his tax liability as per the tax slabs given above….Income Tax on Salary – How to Calculate?Taxable IncomeTaxRs. 2,00,001 – Rs. 5,00,00010% of the amount in excess of Rs. 2 Lakhs6 more rows•Jul 29, 2013

Is it compulsory to pay professional tax?

It is a source of revenue for the government. … It is deducted by the employer from their employee every month and remitted to state exchequer and in some states sent to the Municipal Corporation. It is mandatory to pay professional tax. The tax payer is eligible for income tax deduction for this payment.

Is professional tax calculated on gross salary?

Professional tax is calculated every month based on your gross salary for that month. … The professional tax will be levied on this amount of Rs. 40,000. So, each month based on the increase or decrease of your gross salary, your professional tax slab will also differ and accordingly, your employer will deduct this tax.

Why is professional tax deducted?

Profession Tax is a tax which is levied by the state on the income earned by way of profession, trade calling or employment. … In the case of salary and wage earners, the profession tax is to be deducted by the employer from salary and wages, and the employer is liable to pay it to the state government.