Reduction in Gross Salary

• When an employee is on leave without pay (LWP), their gross salary for that month is reduced or becomes zero.
  
• Since PT is calculated based on monthly gross salary, the deduction amount is affected accordingly.
  
• If the salary after adjustment falls below the PT threshold, no deduction is made for that month.
  
• Payroll systems automatically adjust the PT deduction in line with revised earnings.
  
• HR and accounts teams must ensure correct salary processing during LWP.
  

No Deduction in Zero Salary Months

• If the entire month is under LWP and no salary is paid, professional tax is not deducted.
  
• The employee is treated as non-liable for PT during that particular month.
  
• This non-deduction does not require a refund or adjustment in future months.
  
• The employee remains registered but is marked inactive in PT return for that month.
  
• The same principle applies if the employee is suspended without pay.
  

Monthly Return Filing Adjustments

• Employers must reflect such non-deductions in the monthly or quarterly PT returns.
  
• The employee should still be listed, but with zero PT liability shown for the period.
  
• Accurate declaration prevents mismatch with salary records during audit.
  
• In some states, nil payment entries must still be reported for completeness.
  
• The PT registration remains active despite temporary non-deduction.
  

Recordkeeping and Documentation

• Payroll teams should retain leave records, attendance logs, and payslips for LWP months.
  
• These documents serve as evidence in case of queries from PT authorities.
  
• Monthly payroll summaries should clearly state the reason for non-deduction.
  
• HR should maintain a list of employees on LWP for easy reconciliation with tax filings.
  
• All such entries must be consistent with employee master data and returns.
  

No Annual Cap Impact

• Non-deduction during LWP months does not affect the ₹2,500 annual PT limit.
  
• Only the months with eligible income contribute toward the total tax paid.
  
• Annual PT liability is calculated based on actual salary paid in liable months.
  
• There is no requirement to make up for skipped months due to unpaid leave.
  
• PT compliance remains intact if returns are filed correctly and payments match declarations.