Professional Tax in Kerala: Who Pays, Employer Duties and Half-Year Periods
In Kerala, profession tax is levied by local bodies, not by the State GST department. Municipalities and corporations levy it under section 245 of the Kerala Municipality Act, 1994, and village panchayats under section 204 of the Kerala Panchayat Raj Act, 1994. It is assessed for each half-year, April to September and October to March, on companies that transact business in the area and on individuals who work, practise or do business there for at least 60 days in the half-year. Employers deduct it from salaries and remit it to the local body.
What is profession tax and who levies it in Kerala?
Profession tax is a tax on professions, trades, callings and employments that Article 276 of the Constitution allows states and local bodies to levy, subject to a ceiling on the total payable by any one person in a year. In many states the state tax department collects it; in Kerala it is levied and collected by local self-government institutions.
Municipalities and municipal corporations levy profession tax under section 245 of the Kerala Municipality Act, 1994. Village panchayats levy it under section 204 of the Kerala Panchayat Raj Act, 1994, read with the Kerala Panchayat Raj (Profession Tax) Rules, 1996. The local body where the business or employment is carried on is the one you deal with.
Because the levy is local, enrolment, demand notices, payment and receipts are all handled by the municipality, corporation or panchayat. A business with offices in several local body areas deals with each of them for the establishments and employees in that area.
Who has to pay profession tax in Kerala?
Section 245 of the Kerala Municipality Act covers companies that transact business within the municipal area for at least 60 days in aggregate in a half-year, including companies that carry on business elsewhere but control it from a head office within the area. Companies pay their own profession tax as an establishment.
Individuals are liable if, for at least 60 days in aggregate in a half-year, they practise a profession, art or calling, carry on business, or hold a public or private appointment within the area, and in certain cases if they live in the area and work or earn investment income. Salaried employees, doctors, lawyers, chartered accountants, consultants and traders all fall within the levy.
Each person is placed in a class according to income for the half-year, and the tax for that class applies. Section 245(3) gives credit for profession tax already paid to another local authority in Kerala for the same half-year, and section 245(4) prevents a person being charged by two local bodies for the same period.
What are the half-year periods and when is profession tax paid?
Profession tax in Kerala is assessed for two half-years: 1 April to 30 September and 1 October to 31 March. Liability for each half-year depends on business or employment in the area for at least 60 days in that half-year.
The local body raises a demand for each half-year, and the tax is paid within the time given in that demand. Employers normally deduct the tax from salaries during each half-year and remit it to the local body. Late payment attracts penalty under the local body rules, and arrears are recoverable from an employer that failed to deduct or remit.
Because due dates are set through the demand and the local body's notices, keep the demand notices on file and diary the dates they give. Paying for each half-year within that half-year is the safe practice.
What must an employer do?
An employer in Kerala deducts profession tax from the salaries of employees who are liable and remits it to the local body. Under the Kerala Panchayat Raj (Profession Tax) Rules, 1996, the employer furnishes salary details when asked, deducts the tax from the salary of the month in which the demand is served, and remits it within 10 days with a statement of employee names and amounts (rules 16, 19 and 20).
Local bodies that offer online payment let the employer upload employee and salary details in a prescribed template, calculate the total and pay online. Employers may also be asked to show the last paid receipt to confirm there are no arrears.
If an employer fails to deduct or remit, the tax becomes recoverable from the employer as an arrear. Build profession tax into the payroll calendar alongside TDS, provident fund and ESI so that each half-year's deduction and remittance happen on time.
How does a new company enrol for profession tax in Kerala?
Enrol with the municipality, corporation or panchayat in whose area the office or establishment is located. Offices and institutions file the enrolment form prescribed under the local body's profession tax rules, either at the front office or through the local body's online system where available.
The revenue inspector or section officer verifies the form, fixes the class and the tax for the half-year and raises the demand. The company then pays its own establishment profession tax and starts deducting and remitting for employees.
Keep the enrolment acknowledgement, the demand notices and the payment receipts together. Banks, tender authorities and inspectors sometimes ask for the latest profession tax receipt as evidence that the business is in good standing with the local body.
Profession tax in Kerala at a glance
| Question | Short answer |
|---|---|
| Who levies it | Municipalities and corporations (section 245, Kerala Municipality Act, 1994); panchayats (section 204, Kerala Panchayat Raj Act, 1994) |
| Constitutional basis | Article 276, with an annual ceiling per person |
| Periods | 1 April to 30 September; 1 October to 31 March |
| Liability test | Business, profession or employment in the area for at least 60 days in the half-year |
| Companies | Pay their own profession tax as an establishment |
| Employees | Employer deducts from salary and remits to the local body |
| Late payment | Penalty under local body rules; arrears recoverable from the employer |
How a Kerala company handles profession tax
Identify the local body
Find the municipality, corporation or panchayat where each office or establishment is located.
Enrol the establishment
File the enrolment form with the local body, at its front office or through its online system.
Pay the establishment's tax
Pay the company's own profession tax for each half-year against the demand raised.
Deduct from employees
Deduct profession tax from liable employees' salaries and remit it with the employee statement.
Keep receipts
File demand notices and receipts for each half-year and diary the next half-year's dates.
Frequently Asked Questions
- Who collects profession tax in Kerala?
- Local bodies. Municipalities and corporations collect it under section 245 of the Kerala Municipality Act, 1994, and village panchayats under section 204 of the Kerala Panchayat Raj Act, 1994.
- Is profession tax payable by a private limited company in Kerala?
- Yes. A company that transacts business in a municipal or panchayat area for at least 60 days in a half-year pays profession tax as an establishment, in addition to deducting it from its employees' salaries.
- What are the profession tax periods in Kerala?
- Two half-years: 1 April to 30 September and 1 October to 31 March. The tax for each half-year is paid against the demand raised by the local body.
- Does the employer or the employee pay profession tax?
- The tax is the employee's liability, but the employer must deduct it from salary and remit it to the local body. If the employer fails to deduct or remit, the tax can be recovered from the employer as an arrear.
- Is there a maximum profession tax?
- Yes. Article 276 of the Constitution caps the total profession tax that can be charged to any one person in a year. Kerala's half-yearly classes are fixed within that ceiling by the local body rules.
- What if I work in one local body area and live in another?
- Section 245(4) of the Kerala Municipality Act prevents double charging: you are not charged more than the higher of the amounts leviable, and tax paid to another local authority for the same half-year is credited.
Related reading: Shop and establishment registration in Kerala · Payroll processing · Payroll compliance checklist · Post-incorporation checklist
Sources: Local Self Government Department, Kerala: profession tax FAQ
Updated November 2026 · Regi Tom Antony, FCA, MBA (Australia), ACMA (UK), CGMA (USA), CISA (USA)
Regi Tom Antony & Associates, Chartered Accountants, ICAI FRN 007670S
Treat profession tax in Kerala as a local-body obligation with two half-years a year: enrol each establishment with its municipality or panchayat, pay the company's own tax, and deduct and remit for employees within each half-year.
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