GST vs Professional Tax
GST vs Professional Tax — two different taxes explained
Overview
GST and Professional Tax are two entirely different taxes that often confuse new business owners. GST is a consumption-based indirect tax on supply of goods and services. Professional Tax is a state-level direct tax on income earned through professions, trades, and employment. Most businesses must comply with both.
Head-to-Head Comparison
| Factor | GST | Professional Tax | Winner |
|---|---|---|---|
| Type of Tax | Indirect tax on supply of goods/services | Direct tax on employment income / profession | Tie |
| Governing Authority | Central Government (GST Council) | State Government (varies by state) | Tie |
| Who Pays? | End consumer pays; business collects and remits | Employee pays; employer deducts and remits | Tie |
| Applicability | All businesses above threshold nationwide | Employees/self-employed in notified states only | Tie |
| Maximum Rate | 28% (luxury / sin goods) | ₹2,500 per year per employee | B wins |
| ITC Available? | Yes — Input Tax Credit on purchases | Not applicable | Tie |
| Filing Frequency | Monthly / Quarterly | Monthly / Annual (state-specific) | Tie |
Data updated for FY 2025–26. Regulations may change — consult a professional before deciding.
Which Should You Choose?
Choose GST if…
You need GST registration if you supply goods or services and exceed the turnover threshold (₹40L for goods, ₹20L for services).
Get GSTChoose Professional Tax if…
You need to register for Professional Tax if you employ staff in states that levy it — both the employee and employer have registration obligations.
Get Professional TaxStill not sure which to choose?
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Talk to an Expert — FreeFrequently Asked Questions
Common questions about GST vs Professional Tax
No. GST is an indirect tax on the supply of goods and services collected from customers. Professional Tax is a state-level direct tax levied on individuals who earn income through professions, trades, or employment. They are completely different taxes.
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