Kerala Professional Tax

Kerala professional tax is levied by Government on salaried individuals, working in Government or Non-Government entities or of any profession, including Chartered Accounts and Lawyers or persons carrying out some form of business. Kerala Government has conferred the power of levelling professional tax under the Kerala Municipality Act, 1994. The professional tax rates are based on the Income slabs set by the State Government. The total amount of professional tax paid during the year is allowed as a Deduction under the Income Tax Act. In this article, we will look at the Kerala Professional Tax in detail.

Know more about Professional Tax Registration and Compliance

Kerala Municipality Act

As per the Kerala Municipality Amended Act, 2015 it is mandatory for all employees who are drawing a half-yearly salary of more than Rs. 12,000 to pay Kerala professional tax. This form of tax is to be paid to the respective municipal corporation in which the company or firm is situated. The professional tax slab is mentioned in the below table.

Kerala Professional Tax Slab

The professional tax slab in Kerala is tabulated here:

Eligibility Criteria For Kerala Professional Tax Registration

Kerala professional tax will be application for the following entities:

• Any company which transacts business in the municipal area for not less than sixty days has to pay professional tax.
• Any company transacts business outside the limit of the municipal area but has its head office from which its business is controlled within the municipal area for sixty days need to pay PT.
• Any person who exercises a profession, art or calling or transacts business or holds any appointment, public or private within the municipal area for not less than sixty days also need to pay professional tax.
• Any person who exercises a profession outside the municipal area, but who resides within the municipal area for not less than sixty days is eligible for PT.
• Any person transacts business outside the municipal area but has his head office or place from which his business is controlled within the municipal area for not less than sixty days.
• Any person resides in the municipal area for not less than sixty days in the aggregate and receives any income from investments, will have to pay a half-yearly tax assessed.

Liability of Members of Firms to Kerala Professional Tax

The professional tax leviable from a firm or association may be levied from the agent of the firm or association,

Liability of Servants of Agents to Professional tax

If a company or person employs an agent or servant to transact business in a municipal area, such company or person will be deemed to transact business in the municipal area, and such servant or agent will be liable for professional tax payment in respect of the business of such company or person.

In case of a company or person is the agent of another company or person, the former company or person will not be liable separately to the professional tax, on the same income as that of the principal.

Assessment of Kerala Professional Tax

Kerala professional tax assessment will be done for every six months. The concerned corporation or municipality secretary during May and November in every half-year, by notice, require every head of office or employer to assess every employee in his institution liable to professional tax and every self-drawing officer to remit the professional tax due following the Schedule to the said notice.

 The details should contain the names of all the persons employed as officers along with a statement of the salary or income of such employed persons.

Calculation of Salary for Professional Tax

For the calculation of salary for Professional tax includes Basic, Special Allowance, Dearness Allowance, Bonus, Extra Income (arrears, leave surrender etc. if any).

Documents for Kerala Professional Tax Registration   

The following documents have to be furnished for Kerala Professional Tax registration.

• Memorandum of Association
• Articles of Association
• PAN Card
• Lease Agreement
• Employer Address Proof and ID Proof and photos
• Employee list with salary details
• List of Board of Directors

Kerala Professional Tax Registration Procedure

The procedure for registering Kerala professional tax is explained in detail below:

Before the end of August and February of every year, head of office or employer will assess every employee liable to tax and recover the amount from him and pay over to the Municipality together with a list of all employees who have been assessed to tax.

Submit an Application

Step 1: The head of the office has to furnish the information in a prescribed application form to the secretary of the concerned municipality within the time prescribed in the notice along with the documents mentioned above.

Following details have to be furnished in the application form:

• Name of Employee
• Designation of Employee
• Half-yearly income
• The amount of tax recovered

The application form Kerala Professional Tax can be obtained from concerned Municipality Corporation. We have here with attached an application form for Thiruvananthapuram municipality corporation professional tax application form.

Step 2: The secretary will on receipt of the information furnished to him, will register the name of the offices or institutions in a register maintained for the Professional tax purpose.

The issue of Receipt for Remittance

Step 3: The Secretary on receipt of the payment will issue an official receipt in the name of the head of the office for the amount remitted.

Step 4: Every head of the office will in turn grant to each taxpayer a certificate of recovery and payment of tax to the Municipality for the half-year.

Payment of Kerala Professional Tax by self Drawing officer

Before the end of February and August every financial year, the self-drawing officer needs to remit or cause to be paid the profession tax due from him in respect of each half-year in accordance with the schedule of tax in force along with a statement showing the details of half-yearly income. On receipt of payment, the Secretary shall issue an official receipt.

Penalty for Non-Payment of Kerala Professional Tax

The delayed payment of professional tax will attract a penalty at the rate of 1% per month. Also for the non- payment, the profession tax will charge a fine of Rs. 5000.

In case you require any assistance for registering Professional Tax in Kerala get in touch with an IndiaFilings Advisor at [email protected].