Professional Tax Odisha Abolished: Historical Slab Rates, Employer Action Steps, and Compliance Guide for 2026

The Government of Odisha abolished Professional Tax effective April 1, 2026. The Odisha State Tax on Professions, Trades, Callings and Employments (Repeal) Ordinance, 2026 (Ordinance No. 02 of 2026) repeals the Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000 in its entirety.

No Professional Tax is payable in Odisha from April 1, 2026 onward. Employers must stop deducting PT from employee salaries starting with April 2026 payroll.

This guide covers the repeal details, what employers must do now, historical slab rates for FY 2025-26 compliance, and the impact on multi-state operations.

What Changed: The Repeal Ordinance

The Governor of Odisha, Hari Babu Kambhampati, promulgated the Ordinance under Article 213 of the Constitution of India on April 21, 2026. The key details:

• Ordinance: Odisha Ordinance 02 of 2026
• Gazette: Odisha Gazette (Extraordinary), No. 1496, dated April 21, 2026
• Notification: No. 5969-I-Legis-22/2026/L
• Effective date: April 1, 2026 (retrospective from the Gazette date)
• Repealed Act: Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000

The Ordinance was issued because the State Legislature was not in session and immediate action was considered necessary.

Why Odisha Abolished Professional Tax

Chief Minister Mohan Charan Majhi, who also holds the Finance portfolio, announced the abolition during the FY 2026-27 State Budget. The rationale:

1. Double taxation concern: Pre-budget consultations raised the point that PT amounts to double taxation for individuals already paying Income Tax under the Income Tax Act, 1961
2. Low revenue contribution: In 2024-25, Odisha collected Rs 316.97 crore from Professional Tax, which was approximately 0.56% of the state's own tax revenue
3. Compliance burden: PT compliance required monthly deductions, returns, and deposits from every employer in the state

The abolition costs the state exchequer approximately Rs 320 crore per year.

Odisha is not the first state to reconsider PT. Several states have historically debated the relevance of PT given India's Income Tax framework, but Odisha is among the first to fully repeal the levy.

Employer Action Steps After Abolition

If you employ staff in Odisha, take these steps immediately:

1. Stop PT Deductions from April 2026

Update your payroll system to remove Odisha PT deductions from April 2026 salary processing onward. No PT line should appear on payslips from April 2026.

2. Clear Outstanding Dues for FY 2025-26

Any PT owed for periods up to March 31, 2026 must still be paid. The savings clause preserves all pre-repeal liabilities. Outstanding arrears are recoverable by the authorities.

3. File the Final Annual Return

Submit the annual PT return for FY 2025-26 within the designated timeline. This is the last return you will file under the repealed Act.

4. Stop Remittances to the State

Do not generate or pay any PT challan for periods from April 2026 onward. No online payment, return filing, or deposit is required under the repealed Act after this date.

5. Update Employee Communications

Inform employees that PT is no longer deducted from their Odisha salaries. Their take-home pay increases by the amount previously deducted (Rs 125 or Rs 200 per month, depending on the slab).

Savings Clause: What Still Applies

The Ordinance includes a savings clause that preserves:

• Assessments completed under the repealed Act remain valid
• Tax payments made up to March 31, 2026 are not refundable
• Notices issued before the repeal date remain enforceable
• Pending legal proceedings (appeals, revisions, reviews) continue under the repealed Act as if it had not been repealed
• Accrued rights and obligations for pre-April 2026 periods are protected
• Outstanding arrears relating to pre-repeal periods remain recoverable

In short: the repeal is prospective in effect. Everything that happened before April 1, 2026 is governed by the old Act.

Historical Slab Rates (Valid Until March 31, 2026)

These rates are relevant for FY 2025-26 compliance, final return filing, and settling outstanding dues.

Tax Rate Chart

Odisha Professional Tax Slabs (Effective Until March 31, 2026)

Monthly deduction based on annual gross salary. These rates are no longer applicable from April 2026.

Annual gross salary up to Rs 1,60,000

No Professional Tax payable

Nil

Rs 1,60,001 to Rs 3,00,000

Rs 1,500 per year

Rs 125/month

Above Rs 3,00,000

Rs 2,500 per year (12th month: Rs 300)

Rs 200/month

Annual PT Summary (Historical)

Key points about the historical structure:

• The exemption threshold was Rs 1,60,000 per year (approximately Rs 13,333 per month)
• The highest slab carried a 12th-month adjustment: Rs 200 for 11 months and Rs 300 in the final month, totalling Rs 2,500 (the Article 276(2) constitutional cap)
• The second slab was uniform at Rs 125 across all 12 months
• Employers deducted PT monthly and deposited it by the end of each month
• Self-employed individuals registered before May 31 paid by June 30; those registered after May 31 paid within one month of registration

Who Was Covered Before Abolition

The repealed Act applied to:

• Salaried employees in government and private sector (PT deducted by employer)
• Self-employed professionals (doctors, lawyers, CAs, company secretaries, engineers, architects, consultants)
• Companies registered under the Companies Act
• Partnership firms, LLPs, and sole proprietors
• Hindu Undivided Families (HUFs)
• Cooperative societies, clubs, and associations
• GST-registered entities operating in Odisha

Historical Exemptions

Before the repeal, the following categories were exempt from PT:

• Members of the Armed Forces (Army, Navy, Air Force)
• Persons with disabilities
• Senior citizens
• Parents or guardians of children with disabilities
• Individuals earning below Rs 1,60,000 per year

Since PT is now abolished, these exemptions are no longer relevant from April 2026.

Historical Penalty Structure

These penalties apply only to FY 2025-26 and earlier periods. If you have outstanding dues, these provisions still govern your liability under the savings clause.

Tax Rate Chart

Penalties Under the Repealed Odisha PT Act (For Pre-April 2026 Periods)

These penalties remain enforceable for outstanding dues relating to periods before April 1, 2026.

Late payment interest

On outstanding tax amount

2%/month

Non-justified late payment

Of total amount due, plus interest

25-50% penalty

Income Tax Deduction: Section 16(iii) Impact

Professional Tax paid during a financial year qualifies for deduction under Section 16(iii) of the Income Tax Act, 1961.

For FY 2025-26 (assessment year 2026-27):

• PT deducted from Odisha employees' salaries up to March 31, 2026 is deductible under Section 16(iii)
• Maximum deduction: Rs 2,500 (the highest slab annual total)
• Available under both old and new tax regimes

From FY 2026-27 onward:

• No PT is payable in Odisha, so no Section 16(iii) deduction will be available for Odisha-based employees
• Employees in other states where PT continues (Maharashtra, Karnataka, Gujarat, etc.) can still claim this deduction

For self-employed individuals, PT paid for FY 2025-26 can be claimed as a business expenditure under Section 37(1) of the Income Tax Act. No such claim will arise from FY 2026-27 for Odisha.

For a detailed breakdown of salary tax deductions, see our guide on TDS on salary.

Impact on Multi-State Employers

If your business has employees across multiple states including Odisha, the abolition simplifies your Odisha compliance but changes nothing for other states.

What Changes for Multi-State Employers

States Where PT Continues

Professional Tax remains active in these states (among others):

• Maharashtra (max Rs 2,500/year)
• Karnataka (max Rs 2,500/year)
• Gujarat (max Rs 2,500/year)
• West Bengal (max Rs 2,500/year)
• Telangana (max Rs 2,500/year)
• Tamil Nadu (max Rs 2,500/year)
• Andhra Pradesh (max Rs 2,500/year)
• Kerala (max Rs 2,500/year)
• Madhya Pradesh (max Rs 2,500/year)

For managing PT across active states, see our guides on multi-state Professional Tax compliance and state-wise Professional Tax rates.

Odisha vs Active PT States: Comparison

Compliance Checklist for Employers

Use this checklist to ensure full compliance during the transition:

• Stop PT deductions from April 2026 payroll
• Update payroll software to remove Odisha PT configuration
• Remove PT line from Odisha employee payslips
• Clear all outstanding PT dues for FY 2025-26 and earlier
• File final annual PT return for FY 2025-26
• Verify no over-deduction occurred in March 2026
• Issue corrected Form 16 reflecting PT deduction only for April 2025 to March 2026
• Update employee communications about increased take-home pay
• If multi-state: confirm PT deductions continue correctly for other states
• Retain PT records for pre-April 2026 periods (savings clause may require them for future proceedings)

Where Tax Garden Helps

The Odisha PT abolition simplifies compliance for employers in the state, but transition steps and multi-state coordination require attention.

Tax Garden handles:

• Payroll updates: Correct removal of Odisha PT from your payroll configuration
• Final return filing: Filing the last annual PT return for FY 2025-26
• Outstanding dues clearance: Identifying and paying any pending PT liabilities for pre-repeal periods
• Multi-state coordination: If you have employees across states, we manage PT compliance in every state where it remains active
• Form 16 corrections: Ensuring Section 16(iii) deductions are correctly reflected for the transition year

For a broader view of Professional Tax across Indian states, see our state-wise Professional Tax rates guide. For outsourced payroll management that includes PT compliance across all active states, see our payroll outsourcing guide.

Looking for expert help with professional tax Odisha, Odisha professional tax abolished, professional tax Odisha 2026, Odisha PT abolished, professional tax Odisha slab rate, Odisha professional tax repeal, professional tax Odisha abolished April 2026, Odisha PT repeal ordinance 2026? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.

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Sources: Odisha State Tax on Professions, Trades, Callings and Employments (Repeal) Ordinance, 2026 (Ordinance No. 02 of 2026, Odisha Gazette Extraordinary No. 1496, April 21, 2026); Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000 (repealed); Constitution of India, Article 213 and Article 276(2); Income Tax Act, 1961, Section 16(iii) and Section 37(1); SCC Times (scconline.com); Deccan Chronicle; TaxGuru (taxguru.in); OdishaTV (odishatv.in); KalingaTV (kalingatv.com); SGCMS regulatory updates (sgcms.com); factohr.com; greythr.com; cleartax.in; godigit.com; simpliance.in; zoho.com; indiafilings.com; Odisha Commercial Tax Department (odishatax.gov.in); Odisha Finance Department (finance.odisha.gov.in). Historical slab rates confirmed via factohr.com, greythr.com, cleartax.in, godigit.com, zimyo.com, saachihrms.com. Fiscal cost (Rs 320 crore/year) and revenue share (0.56%, Rs 316.97 crore in 2024-25) confirmed via multiple news sources. This article provides general information and is not a substitute for professional advice specific to your business circumstances.