Professional Tax in Meghalaya

Professional Tax in Meghalaya

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Professional Tax in Meghalaya

Professional tax is a form of tax collected from the income-earning residents of India’s states. This mode of tax is administered by the state governments, which explains the rationale behind the differences in the rates and methods of calculation; where the only constant is that the sum of tax, which wouldn’t be more than Rs. 2,500 in a given year. Professional tax is implemented by the state governments of Punjab, Karnataka, West Bengal, Andhra Pradesh, Bihar, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim. In this article, we look at the various aspects related to professional tax in Meghalaya in detail.

Reason for the Implementation

The municipalities of India are in need of revenues to play the role of astute administrators of development. Estimates suggest that municipalities located in the urban terrains require funds amounting to approximately 3 trillion per annum; most of which must be raised by the municipalities themselves. In this respect, professional tax qualifies as a measure which ensures the utilization of investments for the development of public infrastructure.

Governing Regulation

Professional tax comes under the purview of Article 276 of the Indian constitution, which conveys that people involved in professions, trades, callings and employments are covered under the ambit of the Act. Further, the regulation has provided an imposition limit (Rs. 2,500) for this purpose.

Professional tax in the State of Meghalaya is governed by the Meghalaya Professions, Trades, Callings and Employments Taxation Act, 1947. On this note, it may be highlighted that Article 246 of the Indian Constitution empowers the states to formulate laws with respect to concurrent and State list, through the formulation of laws with the Union List is solely vested with the parliament.

Basis of Calculation and Payment

Professional tax is determined by the various states on the basis of the gross income earned by professional and salaried personnel (barring a few states where the rates are predetermined). The liability of a salaried employee is indirectly met with by the employer, thanks to the provision of salary deduction. The amount so deducted from an employee’s account must be remitted to the respective government accounts. Self-employed people are required to deposit their own taxes and file returns for the same.

Payments for this purpose must be deposited to the relevant government office; which could be a municipality, local district board or any other legislative agency.

Tax Rates

Like most of the states, professional tax rates in Meghalaya is determined by the monthly salary or income received by an assessee. The rates so determined are specified below for your reference:

Monthly Salary Professional Tax Liability
Within Rs. 4166 Exempted
Rs. 4167 – Rs. 6250 Rs 16.50 per month
Rs. 6251 – Rs 8333 Rs. 25 per month
Rs. 8333 – Rs. 12,500 Rs. 41.50 per month
Rs. 12,501 – Rs. 16,666 Rs. 62.50 per month
Rs. 16,667 – Rs. 20,833 Rs. 83.33 per month
Rs. 20834 – Rs. 25,000 Rs. 104.16 per month
Rs. 25,001 to Rs. 29,166 Rs. 125 per month
Rs. 29,167 – Rs. 33,333 Rs. 150 per month
Rs. 33,334 – Rs. 37,500 Rs. 175 per month
Rs. 37,500 – Rs. 41,666 Rs. 200 per month
Above the quantum specified above Rs. 208 per month

 Need for Registration

Every company pursuing business requires the possession of two certificates, namely the Professional Tax Registration Certificate (PTRC) and the Professional Tax Enrollment Certificate (PTRC). While the former declares an entity or person as an employer, the latter enables the employers to deduct an employee’s professional tax liability from his/her salary kit. The Certificate of Enrollment is to be obtained within 30 days of the date of enrolling into the system. Employers possessing the certificate are liable to be penalized for non-deposit of the professional tax of their employees.

Foreign employees are exempted from this provision, and so is the case with any foreign diplomatic office, embassy or consulate. Hence, these individuals or entities are not required to apply for the document.

Documents Required for Registration

The following documents must be furnished to the concerned authorities for the purpose of registration:

  • Memorandum of Association (MOA)
  • Certificate of Incorporation
  • PAN Card
  • Lease Agreement
  • Shop & Establishment (S&E) Certificate/Copy of the Trade License

The process of registration in the State can be completed offline by making an application to the concerned governmental bodies. The Government hasn’t specified any procedures for the same till date, though renewal procedures can be pursued in the State Government’s official portal.

Penal Provisions

Delayed payment of professional tax attracts a penalty of 2% for every month of default, which will be hiked to 10% in case of non-payment. On the other hand, delay in obtaining the Certificate of Enrollment would result in penal charges amounting to three times the actual liability.

Post by Sreeram Viswanath

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.