Professional Tax in Manipur

Professional tax is a form of taxation which is imposed on the income-earning residents of India’s states. The task of implementing this tax system is vested with the respective state governments, which explains the rationale behind the differences in the rates of tax between the states. The amount deposited by the taxpayer under this provision qualifies for deduction under the Income Tax Act. In this article, we look at the various aspects of Professional Tax in Manipur in detail.

Applicability

The implementation of professional tax is widespread, yet not all pervasive. The method of taxation is practiced in the states of:

• Punjab
• Karnataka
• Bihar
• West Bengal
• Andhra Pradesh
• Telangana
• Maharashtra
• Tamil Nadu
• Gujarat
• Assam
• Kerala
• Meghalaya
• Odisha
• Tripura
• Madhya Pradesh
• Sikkim

Methodology and Purpose of Implementation

Professional taxes are imposed by the Municipal Corporations of the concerned state governments so as to garner revenues for infrastructural development and other welfare measures. The rates of tax, as already previewed, vary from state-to-state. However, the maximum quantum of the levy is affixed at Rs. 2,500. The tax rate is generally calculated based on the salary of the taxpayer.

Professional tax is primarily governed by Article 276 of the Indian constitution. Provisions for the same in the State of Manipur are implemented in accordance with The Manipur Professions, Trades, Callings and Employments Act of 1981.

It is noteworthy that the state governments may choose to formulate laws pertaining to Concurrent and State list, while the formulation of laws pertaining to Union list is entirely vested with the Parliament.

Article 276 quoted for your reference:

Article 276 of the Constitution of India lays down that “there shall be levied and collected a tax on professions, trades, callings and employments, in accordance with the provisions of this Act. Every person engaged in any profession, trade, calling or employment and falling under one or the other of the classes mentioned in the second column of the Schedule shall be liable to pay to the State Government tax at the rate mentioned against the class of such persons in the third column of the said Schedule. Provided that entry 23 in the Schedule shall apply only to such classes of persons as may be specified by the State Government by notification from time to time.”

Payment Responsibilities

In the realms of professional tax, the onus of tax payments is vested with the following categories of persons:

• Employers
• Self-employed professionals.

Employers, according to this provision, are mandated to don the gloves of the employees and remit tax payments on their behalf after deducting the portion of liability from their salaries. To fulfill this obligation, employers are required to apply for and receive the Certificate of Registration and Certificate of Enrollment. The norms of registration stipulate that separate registrations must be obtained for every state of business operation, whether or not it is a part of the same entity. Employers who have attained the status of designated authorities may remit their payments to the treasury through banking means. The likes of others may do so at a venue decided by the designated authorities.

As for the timeline of payment, employers with more than 20 employees must sort out their liabilities within 15 days from the end of the month, and those with less than 20 employees at their disposal may do the same on a quarterly basis; which to precisely state is the 15^th of the next month from the end of the quarter.

Residents who aren’t salary earners but are recipients of income through other sources are necessitated to make their own tax payments.

Note: These tax remittances should be followed by the filing of returns, which is to be pursued by both the categories of taxpayers.

Registration

As already emphasized, employers are mandated to obtain a Certificate of Registration as well as a Certificate of Enrollment to facilitate the deduction of tax from the salary of the employees. While the former needs to be obtained on an immediate basis, the document concerning enrolment must be obtained within 30 days of the date of establishment of the enterprise.

Exemptions

Professional tax isn’t applicable for:

• Taxpayers above the age of 65.
• A physically challenged person with 40% permanent physical disability or blindness.
• Parent or guardian of a child who is physically challenged or mentally retarded.
• Foreigners employed in an Indian company.

Documents Required

The following documents must be produced while applying for the Certificate of Registration:

• Memorandum of Association (MOA)
• Articles of Association (AOA)
• PAN Card
• Proof of Identity
• Proof of Address
• Lease Agreement

Rates Prevalent in Manipur

The State Government of Manipur has come up with the following rates of tax levy:

Salary Earned	Amount of Levy
Within Rs. 4,250	Nil
Rs. 4,251-Rs. 6,250	Rs. 100
Rs. 6,251-Rs. 8,333	Rs. 167
Rs. 8,334-Rs. 10,416	Rs. 200
Above Rs. 10,417	Rs. 208 (for 11 months) and Rs. 212 (for the final month)

Penal Provisions

The Indian tax laws are not known for its leniency when it comes to dealing with defaults, considering that tampering with tax payments deprives the government of its primary source of revenue. In this respect, non-compliance with this provision results in the following consequences:

• Delay in obtaining the Registration Certificate – Rs. five for every day of delay (for an employer), and Rs. two for every day of delay (for employee).
• Non-payment or delayed payment of professional tax – a penalty of 2% per month (to be calculated from the total outstanding). Non-payment for a specific period of time may attract a penalty of 10% of the total tax due.
• Incorrect or false information – three times the actual tax payable.