Professional TAX Registration
What is Professional Tax (PT)?
Professional Tax levied on income earned by way of profession, trade or employment and collected by the Commercial Taxes Department of State Governments, in some states by particular Municipal Corporations and majority of the Indian states are collecting this tax. It is applicable to all working professionals like lawyers, chartered accountants, and doctors.
In accordance with the provisions of the Act, The States who have levied the professional tax have different slabs / rates. Every Company or Employer require to apply for the Registration Certificate of their respective State Tax Department within 30 days of employing the staff
Persons, carrying freelancing business without any employees are also required to register themselves subject to the monetary threshold provided by the respective State’s legislation. Professional tax levy is subject to the exemption provided by the respective State to certain categories such as parents or guardian of any person who is suffering from mental retardation, blind persons are exempted. The tax amount varies but it is capped at Rs.2500 per annum.
Penalty or Late Fee ?
Penalty of Rs. 5/- per day will be applicable if you are delayed to obtain PT Registration.
Exemption from PT Registration
1. An individual suffering from a permanent physical disability (including blindness).
2. Parents or guardians of individuals suffering from mental disability
3. Women exclusively engaged as agent under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
4. Person above 65 years of age
5. Badli workers in the textile industry.
Following are some of the Indian states and union territories where professional tax is applicable:
1. Andhra Pradesh
2. Karnataka
3. Maharashtra
4. Tamil Nadu
5. Assam
6. Kerala
7. Meghalaya
8. Tripura
9. Bihar
10. Jharkhand
11. Madhya Pradesh
12. West Bengal
13. Manipur
14. Mizoram
15. Odisha
16. Puducherry
17. Sikkim
18. Telangana
19. Chhattisgarh
20. Gujarat
21. Nagaland
* According to the Nagaland Department of Taxes, professional tax is applicable in the state, however, other widely-followed publications there is no professional tax applicable in Nagaland.
Major Indian States and Union Territories Which Do Not Levy Profession Tax
Following are some of the Indian states and union territories where no professional tax is applicable:
1. Arunachal Pradesh
2. Himachal Pradesh
3. Delhi
4. Haryana
5. Uttar Pradesh
6. Uttarakhand
7. Andaman and Nicobar Islands
8. Daman & Diu
9. Dadra and Nagar Haveli
10. Lakshadweep
11. Jammu & Kashmir
12. Punjab
13. Rajasthan
14. Chandigarh
15. Goa
Benefits of Professional Tax Registration
Here are the reasons why one should never miss a professional tax payment
• Judicial requirement:
Employers in many states of India are strictly bound by the judiciary to obtain the registration of professional tax. After the registration, they have to make the deductions and pay the service taxes of all the employees who work under them.
• Avoid paying penalties:
Failure to professional tax registration results in huge penalties that keep on increasing over time.
• Easy to comply:
The professional tax regulations are so easy to follow. The registration procedures can be done quickly and the further proceedings are also much easier.
• Deductions:
Deductions can be claimed in the salary on the basis of the professional tax paid. The deductions will be allowed in the year corresponding to which the taxpayer made the payments.
• State government tax:
The local authorities and the state government have the right to collect all the professional taxes based on employment, profession trades and much more. The collected amount of professional tax per annum should not go beyond ₹2500 per annum.
REQUIRED DOCUMENTS :
• Certificate of incorporation, MOA and AOA/LLP agreement
• PAN card of company/LLP attested by the company director
• Proof of address with NOC from the owner of the premises
• Proof of company bank account with bank statement and a cancelled cheque
• Passport size photograph, address, and identity proof from all the directors
• Shop and establishment / GOMASTA certificate
FAQS
Each Indian state prescribes its slab for professional tax. For example: In Maharashtra, if your monthly income is between ₹7,500 to ₹10,000, then the professional tax levied is ₹175. Similarly, for monthly incomes above ₹10,001, the tax levied is ₹200 for 11 months and ₹300 on the 12th month. Finally, when the monthly salary is less than ₹7500, there is no professional tax imposed.
Each Indian state prescribes its slab for professional tax. For example: In Maharashtra, if your monthly income is between ₹7,500 to ₹10,000, then the professional tax levied is ₹175. Similarly, for monthly incomes above ₹10,001, the tax levied is ₹200 for 11 months and ₹300 on the 12th month. Finally, when the monthly salary is less than ₹7500, there is no professional tax imposed.
Each Indian state prescribes its slab for professional tax. For example: In Maharashtra, if your monthly income is between ₹7,500 to ₹10,000, then the professional tax levied is ₹175. Similarly, for monthly incomes above ₹10,001, the tax levied is ₹200 for 11 months and ₹300 on the 12th month. Finally, when the monthly salary is less than ₹7500, there is no professional tax imposed.
Each individual who registers for a professional tax certificate will receive a certificate which will have the TIN number mentioned as enrollment number or registration number.
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 ₹2500 per year. The salary slab structures for levying professional tax differ from state to state.