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.
Professional Tax in India is applicable for the individuals and entities mentioned here :
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.
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.
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.
Here is the list of states where the professional tax is not applicable
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.
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 for employers having less than 20 employees.
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Professional tax registration for employers having less than 40 employees.
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Professional tax registration for employers having more than 40 employees.
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.
Professional Tax appears at the top of the salary slip as it is deducted even before calculating income-tax. The employer deducts it from the salary of the employee and deposits it with the State Government.
Professional Tax is a mandatory tax paid by every individual, and there are penalties in case of non-compliance.
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.
The professional tax is a state-level tax that is imposed on the income that is earned through profession, trade, calling, or employment. The tax is based on the slab that is dependent on the income o the individual who may be self-employed or working as an employee of an entity.
Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, Meghalaya, Orissa, Tripura, Madhya Pradesh, and Sikkim.
In the case of self-employed individuals, the tax has to be paid by the individual himself. In the case of the individuals, the liability of deducting the tax is on the employer.
Every person that is engaged actively or otherwise in any profession, trades, callings, or employment and falls under one or the other class that is mentioned in the second column of the Schedule I appended to the profession tax act, is liable to pay the professional tax.
An employer who is obtaining the registration certificate has to apply for the same within thirty days of becoming liable to pay the tax.
The employer is liable to pay the professional tax that is assessed under the profession tax act.
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Last updated: Sep 07, 2021