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Professional Tax

Professional Tax

Professional tax is a tax that is imposed by the State government on all salaried individuals. Professional tax is applicable to all working professionals like chartered accountants, lawyers, and doctors. It is levied based on the individual’s employment, trade, or profession. The tax rates differ across all states; however, the maximum amount that can be levied as Professional tax is Rs. 2,500 per annum.

Contents  hide 

1 Benefits

2 Procedure

3 Documents required

4 Why LawDocs?

5 Enrollment certificate & Registration certificate

6 Enrollment certificate obtained by self-employed persons

7 Responsibility for deducting the tax and depositing the same with Government

8 Costs of registration process

9 Exemption from Professional Tax

9.1 Single Child

10 Related

Benefits

A confirmed professional, legally

  • It is a Judicial Requirement

As per the rules and regulations of India, every employee is bound to make the professional tax payment without fail. Employers in many states of India are strictly bound by the judiciary to obtain the registration of professional tax. After the registration, they have to make the deductions and pay the service taxes of all the employees who work under them.

  • To avoid paying penalties

Failure to professional tax registration results in huge penalties that keep on increasing over time.

  • Easy to comply

When something is easy to comply, it won’t be difficult to follow. The professional tax regulations are so easy to follow and are not difficult to comply with. The registration procedures can be done quickly and the further proceedings are also much easier.

  • Deductions

Deductions can be claimed in the salary on the basis of the professional tax paid. The deductions will be allowed in the year corresponding to which the taxpayer made the payments.

  • The State Government Tax

The local authorities and the state government have the right to collect all the professional taxes based on employment, profession trades and much more. The collected amount of professional tax per annum should not go beyond Rs. 2500 per an annum.

Procedure

Different State, different procedure, different slabs

  • The applicant can apply online through CTD portal;
  • The applicant shall file the form and attach necessary scanned documents (Mentioned above);
  • One can also apply offline by direct submitting the documents and application form with prescribed fee to the concerned State Government;
  • Once the applicant applied for registration, he/she should submit the hard copy to the concerned tax department;
  • Tax authority upon the receipt of an application shall scrutinize it for its correctness;
  • Once the department has scanned and verified the application, it shall approve the same and issue the registration certificate to the applicant;
  • Department can also raise a query in case it found a flaw in the application which shall be responded on time.

Documents required

Your credentials

  • Certificate of Incorporation, including MOA & AOA / LLP Agreement.
  • PAN card of Company/LLP which is attested by the company director
  • Place of business proof along with a NOC from the owner of the premises
  • Bank account of the company including bank statement and cancelled cheque.
  • Passport size photographs, address and identity proof from all the directors
  • Board resolution or in other words, the statement of consent by the partners.
  • Shop and establishment certificate
  • Salary register and attendance register

Why LawDocs?

A professional network

  • Professionalism for the professionals.
  • Time bound work delivery.
  • Quality that shows itself.
  • Anytime, anywhere support for you.

Professional tax is a state imposed tax and is imposed on income earned by employees on rendering their services. It is to be filed annually by all the registered employers. The wages/salary of the employees should be taken into consideration while filing the tax returns.

As per the Schedule to the Professional Tax Act, every employer is liable to deduct Profession Tax, from the salary or wages paid to his employees & to pay the Profession Tax so deducted.

The following individuals exempted from professional tax payment:

  • Parents of children with a permanent mental disability.
  • Members of the armed forces or members of auxiliary forces or reservists, serving in the state.
  • Individuals, over 65 years of age.
  • An individual who is physically challenging.
  • Women engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.

Enrollment certificate & Registration certificate

Every employer in specific states requires to deduct taxes from salary when paid to one or more employees when payment made exceeds Rs. 5000 (this limit is for Maharashtra) and deposit with the state government. That entity requires to obtain a registration certificate. When a person employed in a profession by two or more employers and is getting salary/wages exceeding Rs. 5000 but employer is not deducting professional tax then the individual needs to get enrolment certificate from authority.

Any person liable to pay Profession Tax requires to obtain a Certificate of Enrolment (EC).

The professional tax imposes only in the following states: Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamilnadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim.

A person/employer shall apply within 30 days of becoming liable to pay tax.

Generally, after registration the user-id and password (for filling return electronically) can be obtained from the concerned Profession Tax authority, on production of original RC.

Enrollment certificate obtained by self-employed persons

An employer who deducts the tax from the salary of the employee and pays to the government shall obtain a registration certificate and if not then the individual shall get enrolment certificate from the necessary authority.

Responsibility for deducting the tax and depositing the same with Government

  • For the case of individuals who are self-employ, the tax has to be paid by the individual himself.
  • As for the employed individuals, the liability is on the employer.

In some states, the government has initiated the composition scheme, such as in Maharashtra. In such a scheme for example, if any person liable to pay INR 2500 as professional tax can pay lump sum amount of INR 10000 and will be discharged for professional tax liability for further five years.

Costs of registration process

The plan price covers all professional fees and convenience charges. Since Professional tax is a state-level tax the applicable govt. charges vary from state to state. Government charges will charge on an actual basis.

Exemption from Professional Tax

Every state has its own governing provisions and exemption criteria. For example, the Karnataka PT act has given an exemption to certain persons from payment of PT. All charitable and philanthropic hospitals or nursing homes situated in places below the Taluk level in all districts of the State except Bangalore and Bangalore Rural District.

Directors of Companies registered in Karnataka and nominated by the financing agencies owned or controlled by the State Government or by other statutory bodies. Foreign technicians employ in the State provide their appointments are approve by the Government of India for the purpose of exemption from payment of income tax for the said period (the exemption is for a period of 2 years from the date of their joining duty).

Combatant and civilian non-combatant members of the Arm Forces govern by the Army Act, the Navy Act, and the Air Force Act. Salaried or wage-earning blind persons. Salaried or wage-earning deaf and dumb persons. Holders of permits of single taxi or single three-wheeler goods vehicle. Institutes teaching Kannada or English Shorthand or Typewriting.

A Physically handicapped person with not less than 40% of permanent disability (subject to production of a certificate from the HOD of Government Civil Hospital). An ex-serviceman not falling under Sl No.1 of the Schedule.

Single Child

A person having a single child and who has undergone a sterilization operation, subject to the production of a certificate from the District Surgeon, Government Civil Hospital, for having undergone such operation. Central Para Military Force (CPMF) Personnel. Persons running educational institutions in respect of their branches teaching classes up to twelfth standard or pre-University Education. No tax is payable by persons who have attained the age of sixty-five years. Also, no tax is payable for holding any Profession for less than 120 days in the year. Our experts will guide on the applicability of the provisions.

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