Odisha Abolishes Professional Tax: What Employers and Employees Need to Know

Effective 1 April 2026 | Detailed Notification Awaited

In a significant move announced during the State Budget for FY 2026-27, the Government of Odisha has abolished Professional Tax (PT) with effect from 1st April 2026. Chief Minister Mohan Charan Majhi, who also holds the Finance portfolio, cited the longstanding concern that PT constitutes double taxation for individuals already subject to Income Tax — a point raised during pre-budget consultations.

The abolition comes at a fiscal cost of approximately ₹320 crore per annum to the state exchequer, reflecting the government’s intent to ease the compliance burden on salaried employees, professionals, and businesses operating in the state.

Regulatory Context

Professional Tax in Odisha was governed by the Orissa State Tax on Professions, Trades, Callings and Employments Act, 2000. It applied to salaried individuals in both government and private sector, self-employed professionals (doctors, engineers, lawyers, CAs, company secretaries), as well as businesses, companies, LLPs, and GST-registered entities. The maximum annual levy stood at ₹2,500.

Immediate Compliance Implications

Employers and payroll teams should note the following:

• PT deductions from employee salaries must cease from April 2026 salary processing.
• All outstanding PT dues for periods up to March 2026 must be cleared in full.
• Annual returns in Form V for FY 2025-26 are expected to remain applicable and must be filed within the prescribed due date — the abolition is prospective in nature.
• The deduction available to salaried individuals under the old regime of the Income Tax Act, 1961, in respect of PT paid, will no longer be available from FY 2026-27 onwards.
• Payroll systems should be updated to remove the PT computation logic for Odisha.

What Remains Pending

While the Budget announcement carries clear intent, the detailed gazette notification is yet to be issued. This notification will be the operative legal instrument and is expected to cover the formal amendment or repeal of the 2000 Act, transitional compliance provisions, and guidance for entities with pending assessments or dues.

Employers are advised to monitor the official portals — finance.odisha.gov.in and odishatax.gov.in — for the gazette notification before making any irreversible system changes.