Professional Tax
It is a direct tax that is levied by the state government on the income earned by salaried employees as well as self-employed persons who carry out their profession or trade on their own. Since it is a state matter some states charge it as a percentage while other as fixed amount.
It is also not applicable to all the states, the non-applicability states are-
- Central,
- Andaman and Nicobar Islands,
- Arunachal Pradesh, Chandigarh,
- Chhattisgarh,
- Dadra and Nagar Haveli & Daman and Diu,
- Delhi,
- Goa,
- Haryana,
- Himachal Pradesh,
- Jammu and Kashmir,
- Ladakh,
- Lakshadweep,
- Rajasthan,
- Uttar Pradesh,
- Uttarakhand.
Who is required to obtain registration and deduct?
The owner of the business is responsible to obtain registration, deduct and pay the professional tax to the concerned authority of the respective state.
Professional Tax Rate
The rate of deduction varies from states to states. However the maximum amount payable per annum towards professional tax is INR 2,500.
Exemptions for Payment of Professional Tax
There are exemptions provided for certain individuals to pay Professional Tax under the Professional Tax Rules. The following individuals are exempted to pay Professional Tax:
- Parents of children with permanent disability or mental disability
- Members of the forces as defined in the Army Act, 1950, the Air Force Act, 1950, and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the State.
- Badli workers in the textile industry
- An individual suffering from a permanent physical disability (including blindness)
- Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
- Parents or guardians of individuals suffering from a mental disability.
- Individuals, above 65 years of age
Consequences of Violation of Professional Tax Regulation
Each state has its own penalty rates for failure to register for professional tax in time and delay in filing the returns. There is also a penalty for missing the due date, which again depends on the state legislation.
Professional Tax Return and Due dates for payment
The Professional Tax Return is to be filed by all the persons having Professional Tax Registration and the due dates for filing of such returns vary from State to State. Also the due dates for payment of professional tax also varies from state to state.
Documents required for Professional Tax Registration
Certificate of Incorporation / LLP Agreement
- MOA and AOA
- PAN Card of Company/LLP/Proprietor/Owner/Director
- NOC from the landlord, where the business is situated
- Passport size photos of Proprietor/Owner/Director
- Address and identity proof of Proprietor/Owner/Director
- Details of employees and salaries paid
- Additional registrations and licenses