Professional Tax Registration Certificate and Compliance

Professional tax is a direct tax levied on persons earning an income by either practicing a profession, employment, calling, or trade. Unlike income tax imposed by the Central Government, professional tax is levied by the government of a state or union territory in India. In the case of salaried and wage earners, the professional tax is liable to be deducted by the Employer from the salary/wages, and the same is to be deposited to the state government. In the case of other classes of individuals, this tax is liable to be paid by the employee himself. The tax calculation and amount collected may vary from one State to another, but it has a maximum limit of Rs. 2500/- per year.

Professional Tax Applicability

This tax is levied on all kinds of professions, trades, and employment. Profession tax is applicable to the following classes of persons:

  • An Individual
  • A Hindu Undivided Family (HUF)
  • A Company/Firm/Co-operative Society/Association of persons or a body of individuals, whether incorporated or not

The professionals earning an income from salary or other practices such as a lawyer, teachers, doctors, chartered accountants, etc. are required to pay professional tax.

Professional Tax Applicable States across India

Please refer to the following table to know more about the states which impose professional tax in India:

Applicable States Non-Applicable States
Andhra Pradesh Central
Assam Andaman and Nicobar Islands
Bihar Arunachal Pradesh
Gujarat Chandigarh
Jharkhand Chhattisgarh
Karnataka Dadra and Nagar Haveli
Kerala Daman and Diu
Madhya Pradesh Delhi
Maharashtra Goa
Manipur Haryana
Meghalaya Himachal Pradesh
Mizoram Jammu and Kashmir
Nagaland Ladakh
Odisha Lakshadweep
Pondicherry Rajasthan
Punjab Uttar Pradesh
Sikkim Uttarakhand
Tamil Nadu
West Bengal

Professional Tax Rate

The maximum amount payable per annum towards professional tax is INR 2,500. The professional tax is usually a slab amount based on the gross income of the professional. It is deducted from his income every month.

The Commercial Taxes Department of a state/union territory is the nodal agency that collects professional tax on the basis of predetermined tax slabs which vary for each state and union territory. The tax is calculated on the annual taxable income of the individual; however, it can be paid either annually or monthly.

Who Pays Profession Tax?

In the case of Salaried and Wage-earners, the Professional Tax is liable to be deducted by the Employer from the Salary/Wages, and the Employer is liable to deposit the same with the state government.

Self-employed persons who carry out their profession or trade on their own and fall in the ambit of profession tax are liable to pay the tax themselves to the state government.

Employer’s Responsibility for Professional Tax

The owner of a business is responsible for deducting professional tax from the salaries of his employees and paying the amount so collected to the appropriate government department. He/she has to furnish a return to the tax department in the prescribed form within the specified time. The return should include proof of tax payment. In case of not enclosing the payment proof, the register will consider the return incomplete and invalid.

Exemptions for Payment of Professional Tax

There are exemptions provided for certain individuals to pay Professional Tax under the Professional Tax Rules. The following individuals are exempted to pay Professional Tax:

  • Parents of children with permanent disability or mental disability
  • Members of the forces as defined in the Army Act, 1950, the Air Force Act, 1950, and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the State.
  • Badli workers in the textile industry
  • An individual suffering from a permanent physical disability (including blindness)
  • Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
  • Parents or guardians of individuals suffering from a mental disability.
  • Individuals, above 65 years of age

Professional Tax Registration Certificate and Compliance

Tax registration for professionals is mandatory within 30 days of employing staff in a business or, in the case of professionals, 30 days from the start of the practice.

  • Application for professional tax certificate should be made to the assessed state tax department within 30 days of employing staff for his business.
  • If the assessee has more than one place of work, then the application should be made separately to each authority with respect to the place of work under the jurisdiction of that authority.

Due Dates for Professional Tax Payment

If an employer has employed more than 20 employees, he is required to make the payment within 15 days from the end of the month. However, if an employer has less than 20 employees, he is required to pay quarterly (i.e. by the 15th of next month from the end of the quarter).

Professional Tax Return

The Professional Tax Return is to be filed by all the persons who are subject to professional tax and the due dates for filing of such returns vary from State to State.

Benefits of Professional Tax Registration

The benefits of tax registration for professionals are given below.

  • It is simple to comply with the Professional Tax Compliance, which results in a smooth registration process with minimum restrictions.
  • It is compulsory to pay Professional tax as per the law. Hence, the timely payment of Professional tax can help avoid penalties and any punitive action against the Employer or a self-employed person.
  • Professional Tax Compliance is simple, which can enable a smooth and hassle-free Registration Process.
  • The Professional Tax acts as a revenue source for the state governments that helps the government to implement schemes for the various welfare and development of the region.
  • The Employer or the self-employed person can claim a deduction on the previously paid professional tax.

Documents required for Professional Tax Registration

  • Certificate of Incorporation / LLP Agreement
  • MOA and AOA
  • PAN Card of Company/LLP/Proprietor/Owner/Director
  • NOC from the landlord, where the business is situated
  • Passport size photos of Proprietor/Owner/Director
  • Address and identity proof of Proprietor/Owner/Director
  • Details of employees and salaries paid
  • Additional registrations and licenses

Procedure for Obtaining Professional Tax Registration Certificate

The process for fulfilling professional tax obligations varies by state. Additionally, filing deadlines for these taxes also differ depending on state regulations. Professionals/Employers required to pay professional taxes should follow the procedures outlined below.

  • The applicant must file the application form and the requisite documents.
  • The applicant needs to submit the Application with the necessary documents to the concerned state government. A copy of the same should also be submitted to the tax department.
  • On receipt of an application, the tax authority shall scrutinize the application to ensure that all the information is correct.
  • Issue of Professional Tax Certificate: The authority will issue the registration certificate after successfully scrutinizing all the documents.

Penalties Related To Professional Tax Registration

When professional tax policy becomes applicable, all such jurisdictions may impose a penalty for failure to register Profession Tax. However, the precise amount of the Penalty will depend on state regulatory law.

There are also penalties for failing to submit the PT return by the deadline and withholding payments after they are due. Each state’s professional tax regulations determine the actual fine. Businesses that fail to register professional tax, pay taxes late, or file returns on time may face fines, late fees, or imprisonment.

Failure to make a payment by the due date and failure to file a return by the due date carries additional penalties. For example, the following information outlines the penalty amount imposed by the Maharashtra Government for late filing or failure to pay Professional Tax in Maharashtra.

Nature of default Penalty Leviable
Not obtaining PT registration Rs.5/- per day
Late filing of PT return Rs.1,000/-
Late payment of PT dues Interest @1.25% p.m.
Penalty @10%

For example, professional tax of Rs.1 Lakh is delayed by 12 months, then the simple interest payable is Rs.1,250/- and a Penalty of Rs.10,000. Total= Rs.11,250

Maximum Penalty for delay in payment of Rs.1 Lakh for a year and return filing also delayed = 12250

Seamless Professional Tax Registration Services with IndiaFilings

IndiaFilings can assist you in simplifying the process of obtaining a Professional Tax Registration Certificate in India. Here's how our services can benefit you:

  • Expert Guidance: IndiaFilings provides expert guidance on the Tax Registration process for professionals. Our team is well-versed in the nuances of tax regulations and can ensure that your registration complies with the latest rules.
  • Application Submission: IndiaFilings will handle submitting your Tax Registration application to the relevant authorities on your behalf. This ensures accuracy and compliance with all legal requirements.
  • Timely Processing: With IndiaFilings' professional handling, you can expect timely processing of your application, reducing waiting times and allowing you to obtain your Professional tax certificate promptly.
  • Customized Support: IndiaFilings understands that each business and profession has unique requirements. We offer personalized support tailored to your needs, ensuring your registration aligns perfectly with your professional status.
  • Compliance Assurance: Staying updated with ever-changing tax laws and regulations is crucial. IndiaFilings pays attention to the details, ensuring that your registration complies with all necessary tax laws and guidelines.
  • Customer Support: Should you have any questions or concerns during the registration process, IndiaFilings' customer support team is readily available to address your queries and provide timely assistance.

By choosing IndiaFilings to meet your Professional Tax obligations, you can confidently simplify the process and navigate the complexities of tax regulations.

File Your Professional Taxes Efficiently with IndiaFilings!

PT registration FAQ's

How is professional tax calculated?

In India, Professional Tax is calculated on Salary slabs. Under minimum salary, there is no tax. The maximum amount paid as Professional Tax is Rs.2500 per year. The tax slabs differ from state to state.

How much professional tax is deducted from my salary?

Professional Tax appears at the top of the salary slip as it is deducted before calculating income tax. The employer deducts the employee's salary and deposits it with the State Government.

Is it mandatory to pay professional tax?

Professional Tax is a mandatory tax paid by every individual, and there are penalties in case of non-compliance.

Why is professional tax different in every state?

The Professional Tax Rules vary from state to state. As the rules vary from state to state, each state can set limits and rates. But the maximum amount limit has been developed to Rs.2500 per year. The salary slab structures for levying Professional Tax differ from state to state.

What is a professional tax and when is it levied?

The professional Tax is a state-level tax imposed on the income earned through profession, trade, calling, or employment. The Tax is based on the slab dependent on the payment of the individual who may be self-employed or working as an employee of an entity.

Is professional tax imposed in each state?

The professional Tax is imposed in the following states:
  • Andhra Pradesh
  • Assam
  • Bihar
  • Gujarat
  • Jharkhand
  • Karnataka
  • Kerala
  • Madhya Pradesh
  • Maharashtra
  • Manipur
  • Meghalaya
  • Mizoram
  • Nagaland
  • Odisha
  • Pondicherry
  • Punjab
  • Sikkim
  • Tamil Nadu
  • Telangana
  • Tripura
  • West Bengal

Who deducts the tax and deposits the same with the government?

In the case of self-employed individuals, the Tax has to be paid by the individual. In the case of individuals, the liability of deducting the Tax is on the employer

Who has to pay professional tax in India?

Every person engaged actively or otherwise in any profession, trade, callings, or employment and falls fewer than one or the other class mentioned in the second column of the Schedule I appended to the profession tax act is liable to pay the professional Tax

Who is assessed under the Professional Tax Act?

The employer must pay the professional Tax assessed under the profession tax act.

What is the penalty for violating Professional Tax regulations?

The penalties for not registering for Professional Tax or not paying the same within the due date every month vary as per the State in the country again. However, generally, for non-registration, a penalty of Rs. 5 per day is levied. If you pay after the due date, you are charged 10% extra on the professional tax amount as a penalty.

Who is required to obtain a Certificate of Registration (RC)?

Every employer liable to pay Profession Tax on behalf of his employees, for whom he pays salary/ wages within the taxable limit, is responsible for obtaining a Certificate of Registration.

Is their Professional Tax in Union Territories?

No, if you are from a Union Territory of India, you do not need to pay any Professional Tax. This is because the income level in a Union Territory is lower than in any state.

Who are exempt from Professional Tax in India?

There are exemptions for specific individuals to pay Professional Tax under the Professional Tax Rules. The following individuals are exempted from paying Professional Tax:
  • Parents of children with permanent disability or mental disability
  • Members of the forces as defined in the Army Act of 1950, the Air Force Act of 1950, and the Navy Act, of 1957, including members of auxiliary forces or reservists serving in the State.
  • Badli workers in the textile industry
  • An individual suffering from a permanent physical disability (including blindness)
  • Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
  • Parents or guardians of individuals who have a mental disability.
  • Individuals above 65 years of age

What is the maximum amount of professional Tax levied by a state?

Rs 2500 are the maximum amount of professional Tax that any state can levy.

What is the due date for payment of professional Tax?

If the entity has enrolled before 31st May, the due date for payment is 30th June. In case of enrolments made after 31st May, the due date for payment is 30 days before the enrolment date.

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