Applicability Based on Employment in India

• Professional Tax (PT) is a state-level tax levied on income earned by individuals for services rendered within the state.
  
• Foreign employees working in India and drawing a salary from an Indian entity are liable to pay PT, just like domestic employees.
  
• The liability arises if the foreign employee is:
  
  • On the payroll of an Indian employer.
    
  • Rendering services physically in India.
    
  • Receiving salary disbursed or processed in India.
    

Employer’s Responsibility to Deduct PT

• If a company employs foreign nationals, it must include them in the monthly PT deduction cycle, provided their income exceeds the applicable state-specific salary threshold.
  
• The employer is obligated to:
  
  • Deduct PT as per applicable salary slab.
    
  • Include the foreign employee’s name in the PT return filing schedule.
    
  • Remit the tax to the respective state’s PT department within the due date.
    

Exemptions and Residency Status

• PT laws generally do not differentiate between Indian and foreign nationals in terms of liability.
  
• However, if a foreign employee is:
  
  • Working remotely for an Indian company but located outside India,
    
  • Or being paid entirely outside India,
    
  • Then PT may not apply, subject to the state’s interpretation of ’employment in the state’.
    
• Short-term business visitors may also be exempt, especially if they are not on Indian payroll.
  

Registration Not Required for Foreign Nationals

• Individual foreign employees are not required to obtain separate PT registration (PTEC).
  
• The responsibility for PT compliance lies solely with the employer via the PTRC (Professional Tax Registration Certificate).
  

Compliance in Multi-State Operations

• If a foreign employee works across multiple Indian states (e.g., consultants or project-based professionals), PT is payable in the state where the salary is processed or services are rendered.
  
• Employers must ensure state-specific compliance, especially when transferring foreign staff across locations.