Bhubaneswar: The Odisha Cabinet has decided to promulgate an Ordinance to amend the Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000, effectively paving the way for the abolition of Professional Tax in the State.
Since the Odisha Legislative Assembly is not in session, the government has invoked Article 213(1) of the Constitution to bring this reform through an Ordinance. The move aims to reduce the compliance burden on citizens and businesses while promoting ease of doing business.
Enacted in 2000 to augment state revenue, the Act imposed a maximum Professional Tax of Rs 2,500 per annum on various professionals, including medical practitioners, consultants, agents, salaried employees, dealers, and entities. Even small establishments and non-profit organisations with negligible or no turnover were required to pay the maximum amount.
In 2024-25, the state collected Rs 316.97 crore from Professional Tax, which accounted for only about 0.56 per cent of its own tax revenue. Officials noted that the high administrative cost of assessment, collection, and enforcement far outweighs the limited revenue generated.
The levy of Professional Tax is also seen as inconsistent with the principles of “One Nation, One Tax, One Market” after eight years of GST implementation. It has imposed an unnecessary compliance burden on Micro, Small and Medium Enterprises (MSMEs), small establishments, and start-ups, running contrary to the state’s efforts to create a business-friendly environment.
The proposed Ordinance is expected to provide relief to lakhs of salaried employees, professionals, and small businesses. Further details on the effective date and modalities will be notified after the promulgation of the Ordinance.This decision reflects the government’s commitment to simplifying the tax regime and supporting economic growth under the broader vision of Viksit Odisha.
