Professional Tax in Meghalaya
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.
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.
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.
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.