Gross Salary

• Professional tax is generally calculated on the gross salary paid to an employee.
  
• Gross salary includes all fixed and variable components before deductions.
  
• It serves as the base for determining the applicable tax slab.
  
• All income paid in cash or kind is considered, unless explicitly exempted.
  
• The gross salary must be accurately reported for proper tax deduction.
  

Basic Pay

• Basic pay forms a major component of the gross salary and is always included.
  
• It is the fixed amount paid before allowances and bonuses.
  
• States consider basic pay as a primary factor for determining liability.
  
• Any fluctuation in basic pay can affect the applicable professional tax slab.
  
• This component is consistently counted across most state rules.
  

Dearness Allowance (DA)

• Dearness Allowance is paid to compensate for inflation and cost of living.
  
• It is treated as part of taxable income for professional tax purposes.
  
• Combined with basic pay, it influences slab classification.
  
• Inclusion of DA is standard in most states’ definitions of salary.
  
• Any revision in DA must reflect in payroll for correct deduction.
  

Allowances and Incentives

• Various allowances such as house rent allowance (HRA), travel allowance (TA), and performance incentives are often included.
  
• Some states may exclude specific allowances, but most consider them in gross salary.
  
• Bonuses, commissions, and arrears are usually considered if paid within the period.
  
• Uniform treatment of allowances helps avoid under-deduction.
  
• Proper categorization ensures accurate slab application.
  

Non-Monetary Benefits

• Perquisites like accommodation, vehicle use, or food coupons may be included if they form part of gross earnings.
  
• States differ on whether non-monetary benefits are part of taxable salary.
  
• If such benefits are monetized in payroll, they become taxable under professional tax.
  
• Their inclusion must follow specific state rules or notifications.
  
• Employers must classify such components correctly to remain compliant.