Professional Tax

What is the definition of professional tax?

Professional Tax is a state-imposed tax that is charged on the revenue produced by the trade and submitted by the employer. Every year, a person must pay a professional tax of about Rs.2500 to the state or any local government in the form of a tax on professions, trades, callings, and employments. Professional tax is not just charged on professionals in India; it is also levied on all workers, company owners, freelancers, and professionals, among others, and it is subject to income surpassing the monetary threshold if one exists.

The state government levies a type of tax known as professional tax. Under Article 276 of the Indian constitution, which deals with taxes on professions, trades and callings, and employment, the state government is also allowed to establish legislation regarding the professional tax, despite the fact that it is an income tax. It’s worth noting that professional tax is a deductible expense that may be deducted from taxable income.

In India, who is responsible for paying the professional?

The following people and entities are subject to professional tax in India:

Limited Liability Partnerships Limited Liability Corporations Limited Liability Corporations Limited Liability Corporations Limited Liability

  1. Corporations\Societies
  2. Undivided Hindu Family Associations
  3. Clubs
  4. Contractors, Architects, and Legal Practitioners
  5. Insurance Agents for Engineers
  6. Tax experts, Chartered Accountants, Company Secretaries, and Surveyors
  7. Medical Representatives, such as physicians, as well as management professionals
  8. Members of the armed forces, both civilian and non-civilian.
  9. Technicians from other nations who work for the government
  10. Each state has its own set of penalties for professional tax. There is also a penalty for not registering. There is a penalty for late return submission in addition to the penalty for non-payment.
Tax registration for professionals

The method for registering for professional tax differs from state to state, and the slab rates might range from one state to the next. If a business owner has workers who work in various states, he or she must register for professional tax in all of them.

Within 30 days of hiring employees, the firm must file an application for professional tax registration to the state tax authority. If there are several places of employment, each authority must submit a separate application for each place of employment that falls under their jurisdiction.

There is a penalty of Rs 5 each day if the professional tax is not paid on time, and there is also a penalty of 10% of the tax if the tax is not paid.

Frequency of filing returns: The frequency with which one must file returns is determined by the state in which one resides, therefore it is essential to understand the regulations of the state before filing the taxes.

In India, which states charge a professional tax?

The highest amount of professional tax that an individual must pay is Rs.2500. The tax amount is determined by the professional’s gross income. It is taken from his or her pay every month by his or her employer. The following is a list of states that charge a professional tax.

  1. Andhra Pradesh
  2. Assam
  3. Bihar
  4. Chhattisgarh
  5. Gujarat
  6. Karnataka
  7. Kerala
  8. Madhya Pradesh
  9. Maharashtra
  10. Manipur
  11. Meghalaya
  12. Mizoram
  13. Orissa
  14. Puducherry
  15. Tamil Nadu
  16. Tripura
  17. West Bengal

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

  1. Arunachal Pradesh
  2. Delhi
  3. Goa
  4. Haryana
  5. Himachal Pradesh
  6. Jammu & Kashmir
  7. Jharkhand
  8. Nagaland
  9. Punjab
  10. Rajasthan
  11. Sikkim
  12. Uttar Pradesh
  13. Uttaranchal
  14. Andaman & Nicobar
  15. Chandigarh
  16. Daman & Diu
  17. Dadra & Nagar Haveli
  18. Lakshadweep
What makes a state's professional tax different from other's?

The professional tax is imposed by the state government and varies per state. Each state establishes a slab, from which the professional tax is deducted. In addition, several states and union territories do not levy a professional tax. Professional tax is paid in 12 equal payments; however, if the source of income falls under one of the sectors, they will be subject to a separate tax.

The professional tax differs from state to state because each state has its own regulations and legislation. All states, on the other hand, use a slab system. The slab system is based on an individual’s salary. As a result, the state government imposes a tax on the basis of income.

Types of Tax Certificates for Professionals

Professional tax certifications are divided into two categories:

PTEC (Professional tax enrolment certificate): This is paid by the business entity, owner, or professional, such as a Private or Public Limited Company, a Sole Proprietor, or a Director.

PTRC (Professional tax registration certificate): The government or a private employer deducts tax from an employee’s salary and deposits it with the government.

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