If your business operates in Odisha or if you employ staff based in the state here is a payroll change you need to implement right away: Professional Tax in Odisha no longer exists.
The Governor of Odisha promulgated Odisha Ordinance 02 of 2026 on 21 April 2026, repealing the Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000 in its entirety. The repeal takes effect from 1 April 2026. From that date, no employer in Odisha should deduct Professional Tax from employee salaries, and no employer should remit PT to the state government.
This decision came as part of the Odisha Budget 2026–27 announcements. The state government chose to abolish PT to reduce the tax burden on salaried employees and simplify payroll compliance for employers. As a result, Odisha joins a growing list of Indian states including Delhi and Haryana that do not levy Professional Tax.
This guide explains exactly what happened, what the Ordinance says, what it means for your April 2026 payroll onwards, what past liabilities look like, and what employers must do next.
Need to update your Odisha payroll for the PT abolition? Futurex manages end-to-end payroll and statutory compliance for businesses across Odisha and all Indian states including automatic PT, PF, and ESI updates. Free consultation available. Call +919266339256.
📋 What This Guide Covers
✅ Official Ordinance: Download link to the Odisha Government Gazette
✅ What happened: The exact legal action Odisha took to abolish PT
✅ Effective date: When the repeal kicks in and what it covers
✅ Savings clause: What happens to past PT dues, penalties, and proceedings
✅ Employer action plan: What to stop, what to update, what to keep
✅ April 2026 payroll: How to handle the transition month
✅ PT registration: What to do with existing PT enrolment certificates
✅ Other PT states: Is this trend spreading across India?
✅ FAQ: Past deductions, refunds, penalties, multi-state employers
Official Ordinance: Download the Odisha Government Gazette
The Odisha Government published this ordinance in the Odisha Gazette (Extraordinary) on 21 April 2026. Employers, HR professionals, chartered accountants, and compliance teams can read and download the original document directly:
📄 Official Government Document — Odisha PT Repeal Ordinance 2026
Document: The Odisha Gazette (Extraordinary) — No. 1496
Ordinance: Odisha Ordinance 02 of 2026
Full Title: The Odisha State Tax on Professions, Trades, Callings and Employment (Repeal) Ordinance, 2026
Notification No.: 5969─I-Legis-22/2026/L.
Published: Cuttack, Tuesday, 21 April 2026 (Baisakha 1, 1948)
Promulgated By: Hari Babu Kambhampati, Governor of Odisha
Signed By: Pabitra Mohan Samal, Principal Secretary to Government
Effective From: 1 April 2026
Note: Upload the PDF to your WordPress Media Library first, then replace the URL above with your direct PDF link.
What Professional Tax Was And What Odisha Just Did
Professional Tax is a state-level tax that Indian state governments levy on salaried employees, self-employed professionals, and business owners. Unlike income tax which the Central Government administers PT is a state subject under Entry 60 of List II (State List) of the Seventh Schedule to the Constitution of India.
How Odisha’s PT System Worked Before the Abolition
The Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000 governed PT in the state. Under this Act, employers deducted PT monthly from employees’ gross salaries based on a slab structure. The employer then remitted the collected PT to the state government. Additionally, employers themselves paid a separate PT enrolment charge as a business entity. Together, the two obligations — deduction from employees and employer enrolment made up Odisha’s PT compliance framework.
The Exact Legal Action: Full Repeal, Not a Rate Change
This is not a rate reduction, a temporary exemption, or a slab restructuring. The Governor of Odisha promulgated an Ordinance on 21 April 2026 under Article 213(1) of the Constitution — which allows the Governor to legislate when the state legislature is not in session to completely repeal the Odisha State Tax on Professions, Trades, Callings and Employments Act, 2000.
In legal terms, the Act ceases to exist. No new PT liability arises from 1 April 2026 onwards. No employer must deduct PT from employees. No employer must remit PT to the state. The tax is gone.
✅ Key Facts: Odisha PT Abolition at a Glance
Action taken: Full repeal of the Odisha Professional Tax Act, 2000
Ordinance number: Odisha Ordinance 02 of 2026
Effective date: 1 April 2026
Who it affects: All employers and employees in Odisha
Impact on employee take-home: Salary increases by the PT amount previously deducted
Impact on employer liability: No more PT remittance to state government
Legislative basis: Article 213(1) of the Constitution of India
What the Ordinance Says About Past Dues and Ongoing Proceedings
A full repeal does not mean past obligations simply vanish. Section 2(2) of the Ordinance contains a “savings clause” — a standard legal provision that protects existing rights, obligations, and proceedings even after an Act is repealed. Employers must read this carefully to understand what the repeal does and does not eliminate.
What the Savings Clause Protects
Specifically, the repeal does not affect:
⚠️ What the Repeal Does NOT Eliminate — Section 2(2) Savings Clause
(a) Previous operations of the Act: Anything done, any order passed, any return submitted, any notice issued, any assessment made, any tax paid, and any tax arrear outstanding under the old Act — all of these remain valid and enforceable.
(b) Acquired rights and liabilities: Any right, obligation, or liability that arose under the old Act continues to exist — the repeal does not wipe it out.
(c) Ongoing investigations and proceedings: Any legal proceeding, investigation, or remedy already underway can continue as if the Act had not been repealed.
What This Means in Practical Terms
In plain language: if your business owes outstanding PT arrears from any period before 1 April 2026, those arrears remain legally recoverable. The state government retains full authority to assess, demand, and recover unpaid PT for periods up to and including March 2026. Any penalty notice or assessment order issued before the repeal remains valid. Any appeal or legal proceeding already in motion continues normally.
The abolition applies only going forward — from 1 April 2026. Consequently, the cleanest position for any employer is to ensure that all PT liabilities for periods up to March 2026 are fully paid and documented before treating the obligation as concluded.
How This Changes Your Odisha Payroll from April 2026
For payroll teams managing Odisha employees, the changes are clear and immediate. Here is exactly what stops, what increases, and what records to maintain going forward.
What Stops Immediately from April 2026
❌ PT deduction from employee salaries: Stop deducting Professional Tax from the gross salary of any Odisha-based employee. From April 2026, no deduction line for PT appears on payslips.
❌ PT remittance to the state government: Stop paying PT to the Odisha state government. No challan, no online payment, no return filing for PT from this month onwards.
❌ PT return filing: The filing obligation ends along with the tax. No half-yearly or annual PT returns need filing for periods from April 2026.
❌ Employer PT enrolment fee: The employer-side PT enrolment payment obligation also ends, as the underlying Act no longer exists.
What Increases: Employee Take-Home Pay Goes Up
Because PT no longer deducts from salaries, every Odisha-based employee sees a small but real increase in monthly take-home pay from April 2026. The exact amount depends on the employee’s salary slab under the old PT schedule. Typically, Odisha PT deductions ranged from ₹0 to ₹200 per month for most salaried employees. While small on a per-employee basis, the cumulative impact across a large workforce is meaningful — and for employees who were at the higher end of the slab, this represents a straightforward salary increase without any cost to the employer.
What to Keep: Past Records Must Stay Intact
Even though PT no longer applies going forward, do not delete or discard PT records from previous periods. Because the savings clause in the Ordinance preserves the state government’s right to assess past periods, retain all PT payment challans, return acknowledgements, and deduction records for at least 6–8 years. In the event of a future assessment or audit covering a period before April 2026, these records form your evidence of compliance.
Employer Action Plan: 5 Steps to Handle the Odisha PT Abolition
The repeal is effective, the legal basis is clear, and the practical steps are straightforward. Follow this plan to ensure your payroll reflects the change correctly and your records remain clean:
✅ Step 1: Remove PT from April 2026 Payroll Immediately
First, instruct your payroll team or update your payroll software to remove the Professional Tax deduction line for all Odisha-based employees. If April 2026 salaries already went out with a PT deduction, refund that deduction to the employee in May’s payroll. Do not remit April’s PT deduction to the state government — the liability does not exist from 1 April 2026.
✅ Step 2: Clear All Outstanding PT Dues up to March 2026
Next, verify that all PT liabilities for periods up to and including March 2026 are fully paid. Because the savings clause preserves the state’s right to recover pre-repeal arrears, any outstanding PT liability from earlier periods remains legally due. Pay and close them now — before the absence of an active PT department makes it harder to regularise.
✅ Step 3: File the Final PT Return if Required
Check whether Odisha’s PT department issues any guidance on filing a final return covering the period up to March 2026. Some states, when they abolish or suspend PT, require a closing return submission. Monitor the Odisha Commercial Tax Department’s website and any circulars they issue in the weeks following the Ordinance promulgation.
✅ Step 4: Update Payslip Template and Payroll System
Subsequently, remove the PT deduction line from the standard payslip template for Odisha employees. Update your payroll software’s tax configuration to eliminate PT from the deductions schedule for Odisha. If your payroll system operates on a state-wise configuration, set Odisha’s PT rate to zero or deactivate the PT module for Odisha specifically.
✅ Step 5: Retain All Historical PT Records
Finally, preserve all PT-related records from previous years — payment challans, return acknowledgements, assessment orders, and employee-wise deduction registers. The savings clause means the state government retains audit authority over pre-April 2026 periods. Retaining records for 6–8 years protects your business in the event of any future assessment or inquiry.
What About April 2026 Salaries Already Processed with PT?
The Ordinance came out on 21 April 2026, but it applies from 1 April 2026. This creates a transition situation where many employers may have already processed April salaries — including a PT deduction — before the Ordinance publication.
⚠️ If You Already Deducted PT for April 2026
Do not remit April’s PT to the state government. Since the repeal applies from 1 April 2026, no PT liability exists for April. If you already deducted PT from employee salaries for April, refund the deducted amount to each employee in the May payroll cycle. Maintain a clear record of this refund — document it as “PT refund — Odisha PT abolished w.e.f. 01-04-2026” on the May payslip. This protects both the employer and the employee in any future review.
PT Registration and Enrolment Certificate: What to Do Now
Most businesses operating in Odisha hold a PT Registration Certificate (for deducting employee PT) and a PT Enrolment Certificate (for the employer’s own PT liability). Now that the Act repeals, these certificates become redundant.
Should You Formally Cancel the PT Registration?
As a practical matter, since the underlying Act no longer exists, these registrations carry no ongoing obligation. However, wait for guidance from the Odisha Commercial Tax Department — they typically issue circulars or notifications on how to handle existing registrations when an Act is repealed. Some departments require a formal cancellation application; others simply close registrations administratively. Do not proactively destroy the registration documents — keep them along with your historical records.
The Bigger Picture: PT Across India in 2026
Odisha’s decision to abolish Professional Tax adds to a growing trend across India. Several major states have already eliminated PT, while others maintain it with varying slab structures. Here is a quick overview of where PT stands across key Indian states as of April 2026:
| State | PT Status | Max Monthly PT | Notes |
|---|---|---|---|
| Odisha | ✅ Abolished | ₹0 | Repealed w.e.f. 1 April 2026 — Ordinance 02/2026 |
| Delhi | ✅ Abolished | ₹0 | No PT applicable in Delhi |
| Haryana | ✅ Abolished | ₹0 | No PT applicable in Haryana |
| Rajasthan | ✅ Abolished | ₹0 | No PT applicable |
| Maharashtra | ⚠️ Active | ₹200/month | Slab-based; max ₹2,500/year |
| Karnataka | ⚠️ Active | ₹200/month | Slab-based; paid annually |
| West Bengal | ⚠️ Active | ₹200/month | Slab-based |
| Telangana | ⚠️ Active | ₹150/month | Slab-based |
| Tamil Nadu | ⚠️ Active | ₹208/month | Half-yearly deduction |
Odisha’s abolition of PT reflects a broader recognition among state governments that PT — a tax capped at ₹2,500 annually under the Constitution — generates relatively modest revenue while adding administrative complexity for both employers and the state’s own tax departments. As Odisha joins Delhi, Haryana, and Rajasthan in eliminating the levy, other states may revisit their PT frameworks in coming budgets.
Impact on Overall Payroll Compliance for Odisha Employers
Removing PT from Odisha payroll simplifies one component of the overall compliance framework. However, all other statutory obligations continue unchanged. It is worth clarifying that PF, ESI, TDS, and minimum wages remain fully applicable and enforceable for Odisha-based employees.
What Remains Mandatory for Odisha Employers
PF (Provident Fund): EPF Act obligations continue fully. Employers with 20 or more employees must deduct 12% of basic + DA from employee salaries and contribute an equal employer share. The PT abolition has zero impact on PF calculation or filing.
ESI (Employee State Insurance): ESIC contributions continue for all employees earning gross wages of ₹21,000 or below per month. Employee deduction at 0.75% and employer contribution at 3.25% remain unchanged. The PT removal does not affect ESI in any way.
TDS on Salary: Income Tax deductions under the Income Tax Act continue as before. PT was always a deductible expense under Section 16(iii) of the Income Tax Act — now that PT no longer applies, employers must recalculate TDS for Odisha employees since one of their previously allowable deductions no longer exists.
Minimum Wages: The Minimum Wages Act obligations continue. Odisha periodically revises minimum wages by industry and skill category — employers must ensure compliance with the current applicable rates.
TDS Recalculation: An Important Downstream Effect
⚠️ Update TDS Calculations for Odisha Employees
Under Section 16(iii) of the Income Tax Act, employees can claim a deduction for Professional Tax paid — up to the actual PT paid during the year. Since PT no longer applies from 1 April 2026, Odisha employees lose this deduction from FY 2026-27 onwards. As a result, their net taxable income increases marginally compared to previous years. Recalculate TDS for all Odisha employees to account for the removal of the PT deduction from their income tax working. Failing to do so leads to under-deduction of TDS.
For a complete understanding of how PF, ESI, TDS, and PT interact in payroll compliance, refer to our complete payroll compliance guide for Indian businesses and our PF and ESI compliance guide.
Frequently Asked Questions: Odisha PT Abolition 2026
Q1: Is this permanent, or could Odisha reintroduce PT later?
The Governor of Odisha promulgated this as an Ordinance — which becomes law immediately but requires state legislative approval within six weeks of the assembly reconvening. In practice, once the state legislature passes the repealing Act (converting the Ordinance into permanent legislation), the repeal becomes final. Until then, the Ordinance carries full legal force. The political and budgetary context — this was a Budget 2026–27 announcement — makes re-introduction unlikely in the short term. Stay tuned to updates when the Odisha State Assembly reconvenes.
Q2: We already deducted and remitted PT for April 2026. Can we recover that from the government?
The Ordinance applies from 1 April 2026 — so any PT collected and remitted for April 2026 was technically collected in error. In terms of recovery from the state government, the Ordinance’s savings clause does not specifically address this situation. Consult the Odisha Commercial Tax Department directly for guidance on refund claims for April 2026 PT remittances. In the meantime, refund the deducted amount to employees in May payroll and document the refund clearly.
Q3: We have outstanding PT dues for FY 2024–25. Does the abolition cancel them?
No — Section 2(2) of the Ordinance explicitly preserves the state government’s right to recover all outstanding PT for periods before 1 April 2026. The savings clause specifically covers “arrears of tax to be realized.” Therefore, any PT dues from FY 2024–25 or earlier remain legally enforceable and collectable by the state government. Pay them now to avoid penalties and interest accumulating further.
Q4: Our company employs staff in Odisha and Maharashtra. Do we still deduct PT for Maharashtra employees?
Yes — absolutely. The Odisha Ordinance affects only Odisha. Professional Tax in Maharashtra continues to apply exactly as before. For Maharashtra employees, you must continue deducting PT as per Maharashtra’s slab structure and remit it to the Maharashtra state government. Each state’s PT rules are entirely independent, and you must maintain separate PT compliance for each state where you have employees.
Q5: Does removing PT affect employee income tax (TDS)?
Yes — and this is an important downstream effect that many employers overlook. Under Section 16(iii) of the Income Tax Act, employees claim a deduction from gross total income for PT paid during the year. Since Odisha employees no longer pay PT from April 2026, they lose this deduction for FY 2026–27. As a direct result, their net taxable income increases marginally — which means their TDS liability may also increase slightly. Recalculate TDS for all Odisha employees at the earliest, and revise Form 16 preparation accordingly.
Q6: Does PF or ESI calculation change because of the PT abolition?
No. PF calculates on basic salary + DA, and ESI calculates on gross wages. Neither computation has any link to Professional Tax. The PT abolition therefore carries zero impact on PF or ESI contribution amounts. Both continue as before — the only payroll change is the removal of the PT deduction line.
Related Reading:
Payroll Compliance India: Complete Guide |
Payroll Management System Guide |
PF & ESI Compliance for Employers |
Payroll Process in India
Need Help Updating Your Odisha Payroll for the PT Abolition?
The Odisha PT repeal is effective from 1 April 2026. If your April payroll still carried a PT deduction, you need to correct it in May — and refund the amount to affected employees. Futurex Management Solutions manages payroll and statutory compliance for businesses across Odisha and all Indian states. We handle every state-specific change automatically, so compliance updates never catch you unprepared.
✅ What Futurex Does for Odisha Employers:
✔ Instant payroll update — PT removed from Odisha employees from April 2026
✔ April PT refund calculation and payslip correction for May cycle
✔ TDS recalculation for Odisha employees (PT deduction removed from Section 16)
✔ Past PT arrear verification and closure support
✔ PT registration cancellation guidance once Odisha CT Dept. issues advisory
✔ PF ECR filing + ESIC challan — unaffected and continuing on schedule
✔ Historical PT record archiving for audit protection
✔ Multi-state payroll management — each state’s PT rules handled separately