Professional Tax

Documents Required

  • Address proof of establishment
  • Address proof of partners, proprietor or directors
  • PAN of partners, proprietors and directors
  • Passport size Photo of partners, proprietors and directors
  • Salary details of employees
  • Financial statements of the establishment

What is professional tax and when is it levied?

Professional tax is a state level tax which is imposed on income earned by way of profession, trade, calling or employment. The tax is based on slabs depending upon income of individual who may be self employed or working as employee of an entity. At present the maximum tax that can be imposed is restricted to is Rs. 2500/-.

What is enrollment certificate and what is registration certificate?

Every employer in specific states is required to deduct taxes from salary when paid to one or more employees when payment made exceeds Rs 5000(this limit is for Maharashtra) and deposit with state government. That entity is required to obtain registration certificate. When person is employed in profession by two or more employers and is getting salary/wages exceeding Rs. 5000 but employer is not deducting professional tax then the individual needs to get enrolment certificate from authority.

Is Professional tax imposed in every state in India?

Professional tax is imposed only in following States: Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamilnadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim.

Who is responsible for deducting the tax and depositing the same with Government?

In case of individuals who are self employed the tax has to be paid by the individual himself
In case of employed individuals, the liability is on the employer

Can the professional tax liability amount be paid in lump sum?

In certain states there is concept of composition scheme. For e.g. in case of Maharashtra, the government announced composition scheme under which any person liable to make payment to government at rate of Rs. 2500 may make a lump sum payment in advance of Rs. 10,000 and his liability to pay for 5 years will be discharged.

What will be the other costs in the registration process?

The plan price covers all professional fees and convenience charge. Since Professional tax is state level tax the applicable govt. charges vary from state to state.

Government charges will be charged on actual basis..

Is there any exemption from Professional Tax payment?

Every state has its own governing provisions and exemption criteria.
For example Karnataka PT act, has given exemption to certain persons from payment of PT. All charitable and philanthropic hospitals or nursing homes situated in places below the Taluk level in all districts of the State except Bangalore and Bangalore Rural District. Directors of Companies registered in Karnataka and nominated by the financing agencies owned or controlled by the State Government or by other statutory bodies. Foreign technicians employed in the State provided their appointments are approved by the Government of India for the purpose of exemption from payment of income tax for the said period ( exemption is for a period of 2 years from the date of their joining duty).

Combatant and civilian non combatant members of the Armed Forces who are governed by the Army Act, the Navy Act and the Air Force Act.
Salaried or wage earning blind persons. Salaried or wage earning deaf and dumb persons.
Holders of permits of single taxi or single three wheeler goods vehicle. Institutes teaching Kannada or English Shorthand or Typewriting.

A Physically handicapped person not less than 40% of permanent disability (subject to production of certificate from the HOD of Government Civil Hospital).

An ex-serviceman not falling under Sl No.1 of the Schedule.

A person having single child and who has undergone sterilization operation, subject to production of a certificate from the District Surgeon, Government Civil Hospital, for having undergone such operation.

Central Para Military Force (CPMF) Personnel.

Persons running educational institutions in respect of their branches teaching classes up to twelfth standard or pre-University Education. No tax is payable by persons who have attained age of sixty five years.

Also no tax is payable for holding any Profession for less than 120 days in the year.

Our experts will guide you on applicability of the provisions.

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