Professional tax under Section 16(iii)

A small deduction most people miss

Professional tax under Section 16(iii) is the state tax your employer deducts from salary (states like Maharashtra, Karnataka, West Bengal, Tamil Nadu levy it). It is fully deductible from salary income — and unlike most deductions, it applies in both the old and new regimes.

State caps are modest (often around ₹2,500 a year), but it is a legitimate, easy deduction.

What you should do

1. Find the professional tax figure on Form 16 Part B or your payslips
2. Enter it under the salary head — it reduces taxable salary directly
3. Because it works in both regimes, claim it regardless of your regime choice
4. Reconcile the amount with your payslip totals
5. Let LastMinute ITR carry it from your Form 16 draft, then verify

Common mistake

Leaving it out because it is small. It is one of the few deductions that survives in the new regime — there is no reason to skip it.

Related guides

• Form 16 guide
• Old vs new regime
• How to file ITR without a CA

Reconcile your salary with LastMinute — file on incometax.gov.in.