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Professional Tax Registration

Professional Tax is levied by State Government on all salaried employees, professionals, and trades in India. It is a compulsory tax paid by all the employees employed in a company.

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Professional Tax Registration

The nomenclature ‘Professional tax’ sometimes fails to deliver its actual meaning. It is a tax which is levied on all kinds of professions, trades, and employment. The tax is applicable based on the income of such a profession, trade, and employment. In fact, business persons, freelancers, etc are liable to pay tax once their income increases the monetary threshold. Unlike income tax which is imposed by the central government, professional tax is imposed by the state government. Though, states like Delhi, Haryana, and UP are exempted from professional tax.

Who Pays Professional Tax?

Self-employed personnel’s who are involved in any kind of profession and trade and fall in the ambit of professional tax are legally responsible for paying tax to the state government. The professional tax is collected by the Commercial Taxes Department of a state/union territory. The tax slabs vary for each state and union territory. The tax is applied to the annual taxable income of the individual; however, it can be paid either monthly or annually. It is necessary for self-employed personnel to obtain the certificate of Enrolment from prescribed authority (of the concerned state) in the prescribed manner.

In case of salaried individuals and wage earners, Professional tax is deducted every month from the salary of employees. An employer cannot deposit the deducted amount without obtaining the certificate of registration from the concerned authority.

Professional Tax Registration

Professional Tax Applicability

Professional tax applies to the following class of persons in states where it is applicable:

  • Individual
  • HUF
  • Private/Public/One person Company
  • Co-operative Society
  • Association of Person
  • Body of Individuals

Payment of Professional Tax

Professional tax is paid and collected at a pre-determined slab rate. It is collected either annually or monthly by the Commercial Tax Department of the respective state. Professional tax is paid directly by a self-employed person engaged in profession or trade business while in case of salaried employees, it becomes employers’ responsibility to deduct and deposit such tax to the respective State Government.

In case of a salaried individual, the employer shall deposit such tax every month while a self-employed person has the liberty to pay professional tax either monthly or annually. The self-employed taxpayer shall obtain Certificate of Enrollment from the tax department of the concerned state.

Tax Rate Slab

Professional tax is a state tax which is levied as per the slab provided by the respective states. Some states charge it at a fixed percentage while others charge it as a fixed amount based on Income Slab such as:

State

Income

Tax Liability

Andhra Pradesh

Up to 15000

15000-20000

Income exceeding 20000

NIL

INR 150

INR 200

Gujarat

Up to 5999

6000-8999

9000-11999

Income exceeding 12000

NIL

INR 80

INR 150

INR 200

Karnataka

Up to 15000

Income exceeding 15000

NIL

INR 200

Kerala

Up to 11999

12000-17999

18000-29999

30000-44999

45000-59999

60000-74999

75000-99999

100000-124999

Income exceeding 125000

NIL

INR 120

INR 180

INR 300

INR 450

INR 600

INR 750

INR 1000

1250

Maharashtra

Up to 7500 (For male)

Up to 10000 (for female)

7500-10000 (for male)

Income exceeding 10000 (for male & female)

NIL

NIL

INR 175

INR 200 – 11 months

INR 300- 12 months

Telangana

Up to 15000

15000-20000

Exceeding 20000

For professionals such as lawyers, architect, practising CA/CA/CMA with experience

ü  up to 5 years

ü  more than five years

 

 

NIL

INR 150

INR 200

 

 

 

NIL

INR 2500 (annual)

West Bengal

Up to 10000

10000-15000

15001-25000
25001-40000

Income exceeding 40000

NIL

INR 110

INR 130

INR 150

INR 200

Benefits of Professional Tax Registration Online

Following are the reasons why one should never miss professional tax liability:

  • Payment of professional tax is a judicial requirement and hence avoiding it can call for any penalty or prosecution, self-employed person and employer shall pay their professional tax as per the rates provided by their concerned state without any delay
  • Professional tax is simple to comply with. Regulations governing professional tax impose minimal restrictions and are easy to get registered with simplified annual/monthly compliances.
  • The deduction can be claimed of earlier paid professional tax on salary.
  • Professional tax is a state tax; therefore, it becomes a state government or local tax authority’s obligation to collect professional tax deducted on professional fees, business income, and salary.

Documents Required for Professional Tax Registration Certificate

List of documents required to get professional tax registration:

  • if the applicant is Company: COI, AOA & MOA
  • if the applicant is LLP: LLP Agreement
  • PAN of the company
  • Address proof for business
  • Identity proof of all directors
  • Address proof of directors
  • Passport size photograph
  • Salary register maintained by the company of its employees

Professional Tax Registration Process Online

Dealers seeking professional tax registration certificate shall follow these steps:

  • The applicant can apply online through CTD portal
  • The applicant shall file the form and attach necessary scanned documents (Mentioned above)
  • One can also apply offline by direct submitting the documents and application form with prescribed fee to the concerned State Government
  • Once the applicant applied for registration, he/she should submit the hard copy to the concerned tax department
  • Tax authority upon the receipt of an application shall scrutinize it for its correctness
  • Once the department has scanned and verified the application, it shall approve the same and issue the registration certificate to the applicant
  • Department can also raise a query in case it found a flaw in the application which shall be responded on time.

Consequences of Violation of Professional Tax Regulation

Penalty is levied on individuals who fail to submit their professional tax. All states impose a penalty for not registering professional tax once it has become applicable. Though, the amount of penalty varies from state to state. Further, states also impose penalties for failing to initiate any payment within due date and also failing to file the return within the specified due date.

A penalty of Rs5/- per day is applicable on late obtaining the registration of certificate. In case of non/late payment of profession tax, penalty will be 10% of the amount of tax. An individual is liable to pay Rs1000 in case of late filing of returns. After one month, a penalty of Rs2000 will be imposed.

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