₹150 to ₹2500: Telangana mulls charging professional tax from private schools, employees

Hyderabad: Telangana government is exploring new avenues to raise revenue to sustain its welfare schemes and development initiatives. One such proposal under consideration is the collection of professional tax from unaided private schools across the state.

Officials have begun initiating the process to bring thousands of educational institutions under the professional tax net. Under the proposal, each institution would be required to pay around Rs 2500 annually, while employees working in the schools would pay professional tax ranging between Rs 150 and Rs 200, depending on their salary slabs.

However, while unaided private schools have broadly agreed to comply with the tax requirement, a key disagreement has emerged between the government and school managements over whether the levy should be implemented prospectively or retrospectively.

Retrospective Tax demand creates logjam

The Telangana government is reportedly examining the possibility of collecting professional tax retrospectively, potentially covering the past five years or even longer. Such a move could significantly increase the state’s revenue.

Financial experts estimate that if implemented prospectively, the government could generate between Rs 60 crore and Rs 75 crore annually through the levy on 11,000 private educational institutions. If collected retrospectively for five years, the revenue could exceed Rs 350 crore, and for ten years it could cross Rs 700 crore.

Managements of unaided private schools, however, argue that retrospective implementation would be difficult and impractical.

According to Sadula Madhusudhan Rao, state president of the Telangana Recognised School Managements Association, school managements have already conveyed their position to the government and are willing to begin paying professional tax from the current financial year.

He pointed out that staff turnover in educational institutions averages around 20 percent every academic year, making it difficult to collect taxes for employees who may have already left the institution.

TRSMA seeks Prospective Implementation

The Telangana Recognised School Managements Association has earlier represented the issue to the government. In a letter dated December 23, 2025, submitted to the Commissioner of the Commercial Taxes Department, the association requested that unaided private schools be permitted to pay professional tax only from a prospective date.

The association said educational institutions are ready to comply with the payment of professional tax both at the institutional level and for their employees once the rule is implemented prospectively. It also requested the government to issue clear instructions to officials so that the system can be implemented smoothly across districts.

The letter further pointed out that schools are providing affordable education and supporting students from low-income families, thereby sharing part of the government’s responsibility in the education sector.

TRSMA also urged the government to revise the salary threshold for professional tax liability. At present, under a 2013 government order, the minimum salary slab for professional tax is Rs 15000. The association requested that the threshold be increased to Rs 40000, considering the rise in the cost of living and inflation.

Race against Financial Year Deadline

The issue has gained urgency as the current financial year is set to end on March 31. If the government clarifies that the tax will be implemented from the present financial year itself, the state could still mobilise around Rs 60 crore to Rs 75 crore within weeks.

However, if the decision is delayed, unaided private schools may insist on paying the tax only from the next financial year, pushing the revenue realization further ahead.

Meanwhile, the Commercial Taxes Department is coordinating with the Education Department to operationalise the mechanism. District Educational Officers have been asked to guide institutions under their jurisdiction on professional tax compliance, while Mandal Education Officers are awaiting detailed instructions before issuing directions to schools.

For the Telangana government, struggling to balance ambitious welfare commitments with tight finances, the proposed professional tax from educational institutions could become an important new revenue stream. Whether it is implemented prospectively or retrospectively will determine how soon the state can tap into this potential source of funds.