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Topic: Professional Tax
Professional tax is levied by state governments or local municipal bodies and is in addition to the income tax that the central government collects.
Constitutional amendment is required to enable any increase in professional tax to amend Clause 2 Article 276.
Article 276 of the Constitution empowers the state to levy the tax in respect of profession, trade, calling and employment, but it also fixes the ceiling that can be amended only through the Constitutional amendment by Parliament.
Currently, 24 Indian states collect revenue through this source and most of them have already imposed the maximum permissible levy of Rs. 2,500 a year. Uttar Pradesh, Uttaranchal, Jharkhand and Arunachal Pradesh are the only exceptions and have not levied professional tax.
The original ceiling on the professional tax, as prescribed in the Constitution passed by the Constituent Assembly, was Rs. 250 a year. It was raised to Rs 2,500 a year in 1988 and since then both the 11th and 12th Finance Commission have called for its upward revision.