Professional tax / tax on employment (Section 16 (iii)

In some states in India, State Governments charge Professional Tax from the employees.

While In some companies, employers pay this professional tax from their pocket while in others they deduct it from employees salary.

In Income tax it is allowed as deduction and not exemption as shown below

If it is paid by employer

it is included in Total income as it is  a benefit provided by company and then Deduction is provided

 

If it is paid by employee,

It is not included In Total Income as no money is received from employer .It is only allowed as deduction

Note:-

If professional tax is due but not paid, then not allowed as deduction

Question 1                 

Basic salary = Rs. 20000 per month

Professional tax = Rs. 500 per month

Calculate Income from salary if professional tax Paid by employer 

Question 2

Solve Question 1 assuming employee pays professional tax