Very similar to Income tax, professional tax is also a component in the payslip of every employee.
Levied by the state governments or even municipal corporations, any income earned through employment, trade calling, or profession is liable to be taxed.
On the brighter side, this tax amount is allowed as a deduction under section 16 of the Income-tax Act. Below is the detailed list of people who comes under the purview of PT.
- Company/LLP
- Individual Professionals
- Partners/Directors
- Employer
Responsibility of Deduction
Every person, be it is own company or behalf of the employees, should apply for professional tax registration with the concerned authority. 2500/- INR is the ceiling amount that can be deducted. The computation of tax and method of registration varies as per states, and mainly there are two types of records:
- PETC
- PTRC
Documents Required
- Address proof of multinational
- Address proof of partners, proprietors or directors as per applicable
- PAN of partners, proprietors, and directors, as per applicable
- Photo of partners, proprietors, and directors, as per applicable
- Salary details of employees
- Financial statement of the establishment
- Certificate of incorporation and address proof just in case of corporate
Benefits
Be it an employer, employee, professionals, or business owners, it's a necessity for everyone.
To Avoid Paying Penalties
One has to face a penalty to miss tax payment, which will increase with time. So kindly avoid missing tax payment and saving yourself from a considerable death.
Easy to Comply
When something is straightforward, then it should be easy for future proceedings as well. The process of registration regarding Professional Tax is honest, and their rules and regulations are easy to understand.
It is a Judicial Requirement
- This tax is under State Government. They are the ones who are responsible for collecting this tax. So for every person, it is mandatory to pay the professional fee according to the government rules and regulations.
- This is by the judiciary, so the employers of any business firm have to make the payment on behalf of professional tax and make sure for the services taxes of their employees.
Deductions
The ultimate objective of every tax that is governed by the state or central government is to for the smooth-functioning of the system. As there is provision for exemption, people can avail it, or else it comes under Tax evasion.
The State Government Tax
State Government or, in some cases, Municipal Corporation, are the concerned bodies for collection of professional tax from salaried professionals or business owners.
FAQs
Is professional tax applicable to union territories?
Yes, union territories also paying tax. But currently, Pondicherry is the only territory that is funding this tax.
Why is the process of calculating professional tax different among the Indian states?
Yes, as it is a state-based tax. So state government has the full right to set the limits on their state tax.
How is the professional tax calculated?
It is based on an individual’s monthly salary. There are various slabs defined. However, the minimum tax amount starts from 175/-INR that goes up to 2500/-INR. Again, the pieces also vary as per different Indian states.
States where PT is levied?
Punjab, Jharkhand, Sikkim, West Bengal, Andhra Pradesh, Karnataka, Maharashtra, Uttar Pradesh, Odisha, Tamil Nadu, Assam, Gujarat, Tripura, Meghalaya, Telangana, Madhya Pradesh, Kerala.
Are there different slabs?
Yes, PT is calculated based on the monthly salary of a professional.
What should I do if I don’t have PAN yet?
The employers will not be able to get a Demat certificate in the online process.
Definition of an employer who submits professional tax on behalf of employees?
An employer who hires employees under them on a monthly salary is liable to profession tax.
How can I get the user id and password to file a return?
You can get the user id and password from the Profession Tax authority after a few working days of registration.
What should I do if the saved Demat certificate is lost?
You have to log in with your user id and password and then re-generate the demo certificate from there.
What is validity period of the Demat certificate?
The validity period is for lifetime until and unless the certificate is canceled.
