If you run a business or employ staff anywhere in Tricity — Chandigarh, Mohali, or Panchkula — you may be wondering whether professional tax applies to you. The answer is different for each of the three areas, and many employers get it wrong simply because the rules vary by state and Union Territory.
Professional tax is a levy on income from trades, professions, callings, and employment. It is charged by state governments (or in some cases, local bodies), and the maximum any state can charge is ₹2,500 per year — a cap set by the Constitution of India. But whether it applies at all depends entirely on which side of the Tricity border your office sits.
Key Takeaways
- Chandigarh (UT): No professional tax — Union Territory, no state PT act applies
- Mohali / SAS Nagar (Punjab): ₹200/month for employees earning ₹15,000 or more
- Panchkula (Haryana): Verify current liability with your tax consultant — Haryana has separate rules
- In Punjab, the employer deducts and deposits PT — not the employee directly
- Punjab employers must register under the Punjab State Development Tax Act 2018
- Deposit deadline: 20th of the following month; annual return also required
What Is Professional Tax?
Professional tax is not a Central Government tax. It is levied by individual state governments under entry 60 of the State List in the Constitution. The maximum amount a state can levy is ₹2,500 per year per person.
It applies to salaried employees, self-employed professionals (doctors, lawyers, architects, consultants), and in some states, traders and businesses. Employers are responsible for deducting it from their employees' salaries and depositing it with the state government.
Professional tax is entirely separate from income tax. Even if your employees pay zero income tax, professional tax may still apply depending on which state they work in.
Chandigarh (UT) — No Professional Tax
Chandigarh is a Union Territory administered directly by the Central Government. It does not have its own legislature to pass state-level tax laws. As a result, no professional tax legislation applies in Chandigarh.
Employers whose offices are within Chandigarh — Sector 17, Sector 22, Industrial Area Phase 1 and 2, or anywhere else within the UT boundary — are not required to deduct or deposit professional tax from their employees' salaries. This includes both local employees and those who commute from Mohali or Panchkula but work in Chandigarh.
The key factor is where the office or place of employment is located — not where the employee lives. An employee who lives in Mohali but works in a Chandigarh office is not subject to Punjab professional tax.
Mohali / SAS Nagar (Punjab) — ₹200 per Month
Mohali (officially SAS Nagar) is in the state of Punjab. The Punjab State Development Tax Act, 2018 governs professional tax for all employers and employees in Punjab.
The current rate is straightforward:
| Monthly Salary / Wages | Professional Tax per Month |
|---|---|
| Less than ₹15,000 | Nil |
| ₹15,000 or more | ₹200 |
This means an employee earning ₹15,000 or more per month pays ₹2,400 per year. Employees earning below ₹15,000 per month pay nothing.
Punjab Employer Compliance — Step by Step
If your office is in Mohali or anywhere else in Punjab, here is what you must do:
Register as an Employer
Register under the Punjab State Development Tax Act 2018 through the Punjab Government's online portal. You will receive an Employer Enrolment Number.
Identify Liable Employees
Each month, identify employees whose gross salary is ₹15,000 or more. These employees are liable for ₹200 professional tax that month.
Deduct from Salary
Deduct ₹200 from the salary of each liable employee during payroll processing. Show it as a separate deduction line item in the salary slip.
Deposit by 20th of Following Month
Deposit the total amount collected from all employees by the 20th of the following month. For example, deductions made in April must be deposited by 20th May.
File Annual Return
File an annual return under the Punjab State Development Tax Act within the prescribed time. The return summarises total employees, total deductions, and total deposits made during the year.
Many small employers in Mohali skip professional tax registration entirely, assuming it is not required for small teams. This is incorrect — there is no minimum employee count threshold. If even one employee earns ₹15,000 or more, the employer must register and deduct.
Panchkula (Haryana) — Verify with Your Tax Consultant
Panchkula falls in the state of Haryana. Haryana's professional tax rules are separate from Punjab's and have undergone changes over the years. The applicability, rates, and compliance requirements for Haryana professional tax should be verified with a tax consultant familiar with current Haryana state tax regulations, as these can differ from Punjab's structure and may be subject to recent updates.
RLVC advises all employers with offices in Panchkula or anywhere in Haryana to confirm their current professional tax obligations before the start of each financial year.
Self-Employed Professionals in Punjab
The Punjab State Development Tax Act 2018 also applies to self-employed individuals — doctors, lawyers, architects, chartered accountants, consultants, and others engaged in any profession or trade in Punjab. Self-employed professionals must enrol directly (separate from employer enrolment) and pay the applicable professional tax themselves. The rate for self-employed professionals is based on income slabs specified in the Act.
Is Professional Tax Deductible as a Business Expense?
Yes. Professional tax paid by an employee is allowed as a deduction from their gross salary income when computing taxable income — under both the old and new tax regimes. The employer's portion of professional tax (if any) is deductible as a business expense for the employer. This deduction is automatic and does not require any separate claim or documentation in the ITR.
Frequently Asked Questions
Does professional tax apply in Chandigarh?
No. Chandigarh is a Union Territory under Central Government administration. No professional tax legislation applies here. Employers and employees in Chandigarh have no professional tax liability.
How much is professional tax in Mohali (Punjab)?
Under the Punjab State Development Tax Act 2018, employees earning ₹15,000 or more per month pay ₹200 per month (₹2,400 per year). Employees earning below ₹15,000 per month pay nothing.
Who deposits professional tax — the employer or the employee?
The employer is responsible. The employer deducts ₹200 from the eligible employee's salary and deposits it with the Punjab government by the 20th of the following month. Employees do not deposit it themselves.
What is the penalty for not deducting professional tax in Punjab?
Failure to deduct, deposit, or file returns on time attracts interest and penalties under the Punjab State Development Tax Act 2018. The employer is liable — not the employee — even if the deduction was missed or not passed on to the government.
I have offices in both Chandigarh and Mohali. How do I handle professional tax?
Apply the rules based on where each employee is stationed. Employees working out of your Chandigarh office have no professional tax liability. Employees working out of your Mohali office are subject to Punjab professional tax if their salary is ₹15,000 or more per month. Maintain separate payroll records for each location.