About Professional Tax

Professional tax is the tax levied and collected by the state governments in India. It is a direct tax. A person earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor etc, are required to pay this professional tax. Levied under Article 276(2) of the Indian Constitution, Professional Tax is deducted by the employer from the salaries of employees every month and remitted to the state. The maximum amount that can be levied annually under this head is Rs 2500. As professional tax is state subject, norms of enrolment, registration, payment, return, assessment, exemption may vary from state to state.

Types of Professional Tax

Though it differs state wise, in general there are basically two types professional taxpayers in India, they are: Employers and Self-employed Persons.

Employers: In case of salaried persons and wage earners, the employer deducts the profession tax from the salary or wages and is liable to deposit the same with the State Government.

Self-employed person: For other individuals, the person himself who has engaged in employment, profession, calling and trade is responsible for paying the tax.

General Exemptions in Professional Tax

The State Governments may reduce the professional tax any time by issuing notifications.

Currently some state governments, the members of Indian Navy serving in any part of state are exempted from the payment of professional tax. The reduction may apply for any person drawing a pay or an allowance.

Parents or guardian of children with a metal disability or permanent disability exempt from paying professional tax

An individual suffering from a permanent physical disability including blindness

Any individual of above 65 years

Enrolment and Registration in Professional Tax

Professional Tax Enrolment is required in relation to business, trade or profession while Professional Tax Registration is required in respect of individuals employed. In a nutshell, Certificate of Registration is applicable to any employer liable to deduct Professional Tax from the salary/wages of the employees whereas, Certificate of Enrolment is applicable to any person engaged in business, trade or profession.

Companies, LLPs, Firms must enroll themselves for Professional Tax. The professional tax registration application must be submitted to the state tax department within 30 days of employing the staff. In case there is more than one place of work then an application has to be made separately to each authority considering the place of business coming under the jurisdiction.

The Government fees for professional tax enrolment depend upon the assessment annual turnover and constitutional status.

Penalties for Violating Professional Tax regulation

The penalties for not registering for Professional Tax or not paying the same within the due date every month varies 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 then you are charged 10% extra on the amount of professional tax as the penalty.

Documentation for Professional Tax Enrolment

  • PAN Card of the Company/LLP/Firm/Proprietor
  • Details of Directors/Partners/Proprietors
  • Trade Licence/Incorporation Certificate/Partnership Deed
  • Bank Statement
  • Mobile No and Email id.

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