Professional Tax

What is professional tax?

Professional Tax is a tax that is levied by the state government, it is levied on the income that is earned by the trade and is remitted by the employer. A person has to pay a professional tax of around Rs.2500 every year to the state or any local authority by the way of the tax on the profession, trades, callings, and the employments.

Professional tax in India is not just levied on the professionals but it is levied on all employees, a person carrying business, freelancers and professionals, etc and it is subject to the income exceeding the monetary threshold if there is any.

Professional tax is a kind of tax that is levied by the state government. The state government is also empowered to make laws with to the professional tax though being a tax on income under Article 276 of the constitution of India which deals with the taxes on profession, trades and callings, and employment. It may be noted that the professional tax is a deductible amount and can be deducted from the taxable income.

Professional tax is just like income tax, but the central government and the professional tax collect the income tax managed by the state government. At the time of the introduction, the maximum limit on the tax to be collected as the professional tax was Rs. 250. There has been an upward revision of the professional tax to Rs. 2500 and has allowed the government to raise the additional resources.

Who has to pay the Professional in India

Professional Tax in India is applicable for the individuals and entities mentioned here :

  • Companies
  • Firms
  • Limited Liability Partnerships
  • Corporation
  • Societies
  • Hindu Undivided Family
  • Associations
  • Clubs
  • Legal Practitioners
  • contractors, Architects
  • Engineers
  • Insurance Agents
  • Chartered Accountants
  • Company Secretaries
  • Surveyors
  • Tax consultants
  • Management Professionals as well as Medical Representatives such as doctors, etc.

Who is exempted from paying the professional tax in India?

  • Ex-servicemen
  • Individuals serving in the Central Para Military Force (CPMF)
  • People who run educational Institutions teaching up to class 12
  • Handicaps with at least 40% disability. A relevant Certificate must be submitted.
  • Any person who has a permit for a single three-wheeler or a single taxi to carry goods.
  • Individuals who are deaf, dumb, and blind are earning a salary.
  • Civilians as well as non-civilian members from the armed forces.
  • Technicians from foreign countries who are employed by the state

The penalties on professional Tax vary in each state. Also, there is a penalty for Non-Registration. Along with the penalty for non-payment, there is also a penalty for late return filing.

Documents required for Professional tax registration in India

  • An acknowledgment of the online form, along with the printout of the digital form submitted.
  • Copy of PAN Card.
  • Residence proof of Partner, Director, Proprietor.
  • Proof of Constitution of business like Certificate of Incorporation.
  • Memorandum of Association
  • Articles of Association
  • Address proof of Business place.
  • Blank Cancelled Cheque.
  • Establishment Certificate.
  • PAN& PTEC details.
  • Current account statement
  • Business premise proof sale deed if the premise is owned and NOC from the owner of the place is rented.

Professional Tax registration

The procedure for the registration of professional tax varies from state to state, the slab rates can vary from one state to another, where the business owner has employees that are employed in different states then one has to get a professional tax registration for all the states.

The application for the registration under professional tax is to be submitted to the state tax department within 30 days of employing the staff in the business. If there is more than one place of work then an application is to be made separately to each authority considering the place of work that comes under the authority's jurisdiction.

In case there is a delay in the payment of the professional tax, there is a penalty of Rs 5 per day, there is also a penalty of nonpayment there is a penalty of 10% of the tax.

Frequency of filing the returns: The frequency with which one has to file the returns are also depended on the state the person is residing in, so before filing the returns it is very important to know the rules of the particular state.

Which states levy Professional tax in India?

The maximum amount an individual needs to pay as professional tax is Rs.2500. The tax amount is based on the gross income of the professional. It happens to be deducted from his or her income every month by the employer. Here is the list of states where the professional tax is levied.

  • Andhra Pradesh
  • Assam
  • Bihar
  • Chattisgarh
  • Gujarat
  • Karnataka
  • Kerala
  • Madhya Pradesh
  • Maharashtra
  • Manipur
  • Meghalaya
  • Mizoram
  • Orissa
  • Puducherry
  • Tamil Nadu
  • Tripura
  • West Bengal

Here is the list of states where the professional tax is not applicable

  • Arunachal Pradesh
  • Delhi
  • Goa
  • Haryana
  • Himachal Pradesh
  • Jammu & Kashmir
  • Jharkhand
  • Nagaland
  • Punjab
  • Rajasthan
  • Sikkim
  • Uttar Pradesh
  • Uttaranchal
  • Andaman & Nicobar
  • Chandigarh
  • Daman & Diu
  • Dadra & Nagar Haveli
  • Lakshadeep

Why is Professional tax different in a different state?

As the state government levies the professional tax, it differs in each state. Each state declares a slab, and the professional tax is deducted based on these slabs. Many states and union territories do not charge any professional tax too. The professional tax is paid in 12 equal installments, in such situations where the source of income is falling under the sectors they will be liable for separate tax.

As each state has its regulations and laws on the professional tax, the professional tax varies from state to state. However, a slab system is followed by all the states. The slab system is based on the income of the individual. Hence, the state government levies the tax based on income.

Types of Professional Tax Certificates

There are two types of Professional tax certificates:

PTEC (Professional tax enrollment certificate): This is paid by the business entity, owner, or the professional i.e. Private or the Public Limited Company, Sole proprietor, Director, etc.

PTRC (Professional tax registration certificate): The government or the Non- government employer is deducting the tax from the employee's wages and deposit the same to the government.

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Professional Tax Registration FAQ's

Professional Tax Registration in State

Professional Tax Registration in City

Last updated: Dec 10, 2021


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