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Is the Professional Tax Levied by Some Authorities Unconstitutional?

Article 276(2) of the Constitution of India, which empowers state government authorities to levy Professional Tax (PT), restricts levy of PT on a person by a government authority (such as a city corporation) to a maximum of Rs 2,500 per annum.

Article 276(2) –

The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed two thousand and five hundred rupees per annum.

We find some government authorities levying PT in excess of Rs 2,500 per annum. For example, the Coimbatore City Municipal Corporation (since Apr 2014) levies Rs 1,268 as the half-yearly PT if an employee earns more than Rs 75,000 in a half-year. In other words, if an employee in Coimbatore earns more than Rs 150,000 in a year, he ends up paying Rs 2,536 (Rs 1,268 x 2) as PT each year. This is in excess of Rs 2,500 per annum.

We wonder if this is a violation of Article 276(2) of the Constitution of India.

A follow-up question.

Section 16(iii) of the Income Tax Act states that the tax on employment (Professional Tax) within the meaning of article 276(2) of the Constitution of India, leviable by or under any law, shall be allowed as a deduction in computing the income under the head “Salaries.” In other words, the salary paid to an employee may be reduced by the PT amount for the calculation of the taxable salary.

Since Section 16(iii) refers to article 276(2), can we argue that any PT deducted in excess of Rs 2,500 by a single government authority (like the Coimbatore example above), cannot be considered for tax deduction by employers?