Profession tax deduction from salary arrears is lawful where arrears retain the character of salary.

Profession tax may be deducted from arrears of salary because the Gujarat State Tax on Professions, Trades, Callings and Employments Act, 1976 places the liability on the employee and requires the employer to deduct and pay it from salary or wages before disbursement. The inclusive definition of salary or wage in section 2(g) enlarges the ordinary meaning, so salary paid later in a lump sum does not lose its character merely because it is arrears. Schedule I also supports computation by reference to the amount actually paid or payable for a month where remuneration is not paid monthly.

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Issues: Whether profession tax could be deducted from arrears of salary paid to employees under the Gujarat State Tax on Professions, Trades, Callings and Employments Act, 1976.

Analysis: The charging scheme under section 3, read with section 4 and Schedule I, fastens liability on every person engaged in employment and obliges the employer to deduct and pay the tax from salary or wage before payment. The definition of salary or wage in section 2(g) is inclusive and enlarges, rather than restricts, the ordinary meaning of the expression. Arrears of salary represent salary that was due on the regular monthly dates but remained unpaid and was paid later; the character of the amount as salary is not lost merely because it is disbursed in a lump sum. The explanation in Schedule I also accommodates situations where salary is payable for a period other than a month by requiring computation on the basis of the amount actually paid or payable for a month.

Conclusion: Deduction of profession tax from arrears of salary was lawful and not arbitrary or illegal. The petition failed.

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