Professional Tax Registration and Compliance
Professional Tax is a tax levied by the State government. Professional tax is levied on income however earned in any trade and is usually paid by the employer. The provision detailing the stipulations attached to Provisional Tax, caps the total professional tax payable in respect of any one person to the State or to any local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed two hundred and fifty rupees two thousand and five hundred rupees per annum.
Introduction to Professional Tax
Professional tax is just like Income Tax except for the fact that Income Tax is collected by the Central Government and Professional Tax is collected by the State Government. When this tax was first introduced in India, the maximum limit on the tax to be collected was Rs. 250.
Some of the State Governments have represented that the earlier celling of two hundred and fifty rupees which was fixed in 1949, needs to be revised upwards taking into consideration the price rise and other factors. It is also pointed out that the profession tax has, at present, become almost regressive because of the ceiling since even people with high salaries have to pay this tax at only the maximum amount of two hundred and fifty rupees per annum. The upward revision of profession tax has helped the State Governments in raising additional resources.
Professional Tax Rate
The maximum amount payable per annum towards professional tax is INR 2,500. The professional tax is usually a slab-amount based on the gross income of the professional. It is deducted from his income every month. The state governments of the following states have levied professional tax – Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Orissa, Tripura and Madhya Pradesh. In case of Salaried and Wage-earners, the Professional Tax is liable to be deducted by the Employer from the Salary/Wages, and the Employer is liable to deposit the same with the state government. In case of other class of Individuals, this tax is liable to be paid by the person himself.
Employer’s Responsibility for Professional Tax
The owner of a business is responsible for deducting professional tax from the salaries of his employees and paying the amount so collected to the appropriate government department. He/she has to furnish a return to the tax department in the prescribed form within the specified time. The return should include proof of tax payment. In case of not enclosing the payment proof, the register will consider the return has incomplete and invalid.
Professional Tax Registration
The professional tax registration application must be to the State’s tax department within 30 days of employing staff in a business. If there is more than one place of work, file an application separately to each authority as regards the place of work coming under the jurisdiction of that authority
Delay in obtaining Professional Tax Registration Certificate incurs a penalty of Rs. 5/- per day. In case of late or non-payment of profession tax, the penalty will be 10% of the amount of tax. In case of late filing of returns, it imposes a penalty of Rs. 300 per return.