What is Professional Tax?

Professional tax is a tax that is imposed by the State government on all salaried individuals. Professional tax is applicable to all working professionals like chartered accountants, lawyers, and doctors. It is levied based on the individual’s employment, trade or profession. The tax rates differ across all states, however, the maximum amount that can be levied as Professional tax is Rs.2,500 per annum.

Eligibility of Professional Tax

Professional Tax is imposed on:
Salaried individuals,
working in government or non-government entities,
Chartered Accountants,
Lawyers etc or carry out some form of business.

Rietway Consultants Professional Tax Package

The Services which are included in our package are as Follows:
✅ Consultation
✅ Preparation of Documents
✅Application Filing
✅ Professional Tax Registration

Documents Required for Professional Tax Registration

Certificate of Incorporation/ Partnership Deed/ MSME
MOA / AOA of Company
Pan Card of Company
Id and Address Proofs of Partners
Number of Employees
Electric Bill for Registered Office Proof

Professional Tax Procedure

Step -1 Arrange all Required Documents: The first step is to arrange all the documents and send the same over the email / WhatsApp to us. Once all the Documents are Received, we will Start the Further Process.
Step - 2: Preparation of Documents: The Next Step is Preparation of Documents to be Submitted at Department.
Step - 3: Filling of Application For Professional Tax: The next Step is Filling Of Application for Professional Tax.
Step - 4: After Scrutiny and approval of the application Department Issues Professional Tax.

Benefits of Professional Tax Registration

Is A Judicial Requirements
As per the rules and regulations of India, every employee is bound to make the professional tax payment without fail. 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.

To Avoid Paying Penalties
Failure to professional tax registration results in huge penalties that keep on increasing over time.

Easy To Comply
When something is easy to comply, it won’t be difficult to follow. The professional tax regulations are so easy to follow that and not difficult to comply with. The registration procedures can be done quickly and the further proceedings are also much easier.

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.

The 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 Rs. 2500 per an annum.

Who are exempted from paying Professional Tax?

The Professional Tax Rules provide exemptions to the following individuals
Parents of children suffering from mental or permanent disability.
Members of the armed forces ( as designated in the Air Force Act, Navy Act and ArmyAct ) including members of auxiliary forces/reservists, serving in a particular state.
Individuals with permanent physical disability ( inclusive of blindness).
Individuals over the age of 65.
Badli workers engaged in the textile industry.
Women engaged exclusively as an agent under the Directorate of Small Savings or Mahila Pradhan Kshetriya Bachat Yojana.
Guardians or parents of mentally challenged individuals

What are the consequences of Professional Tax violation?

Though the actual penal interest or penalty can change according to each state’s legislation board, all states will be charged a penalty if they have not registered after the professional tax legislation is made applicable. Also, penalties will be charged if the payments are not made within the due date or if the return is not filed within the due date specified.

Secondly, if the employer fails to submit his/her statement along with documents within 10 days from the date of receipt of the notice, his/her registration may get cancelled.

FAQs on Professional Tax Registration

What is the difference between a professional tax and income tax?
Income tax is a direct tax collected by the central government from all taxpayers. It is charged on a certain percentage of their income. Whereas, professional tax is an indirect tax collected by the state government. It is charged based on a slab for people engaged in business, occupation, or employment.

What is the slab of professional tax?
Each Indian state prescribes its slab for professional tax. For example: In Maharashtra, if your monthly income is between Rs.7,500 to Rs.10,000, then the professional tax levied is Rs.175. Similarly, for monthly incomes above Rs.10,001, the tax levied is Rs.200 for 11 months and Rs.300 on the 12th month. Finally, when the monthly salary is less than Rs.7500, there is no professional tax imposed.

What is the due date of a professional tax return?
Every person who is liable to pay professional tax must file returns by December 31st of each year.

Is professional tax registration mandatory?
Any employer in particular states must deduct taxes from the employees if the salary paid exceeds the minimum slab limit and deposit with the government. That entity is required to get a registration certificate.