The ‘Professional tax’ is a tax, which is levied on all kinds of professions, trades, and employment, and its applicability is based on the income of such-
- Trade, and
The State Government levies professional tax and it varies from state to state. To govern the professional tax of the particular state, every state has its laws and regulations. However, all the states do follow a slab system based on the income to levy professional tax. Further, Individuals carrying on freelancing business without any employees are required to obtain Professional tax certificate subject to the pecuniary threshold if any, provided by the respective State Authorities.
A person has to pay a tax of around Rs. 2500 every year to the state or any local authority by way of Tax on the profession, trades, callings, and employments. Professional Tax is just like Income Tax, but the Central Government and Professional Tax collect the income tax managed by the State Government. The tax rates differ across all states, however, the maximum amount that can be levied as professional tax is ₹2,500 per annum.
There Are Two Types Professional Tax Certificates:-
- PTEC (Professional Tax Enrollment Certificate):
This is paid by the business entity, owner or a professional i.e. Private/ Public Limited Company, Sole Proprietor, Director Etc.
- PTRC: (Professional Tax Registration Certificate):
Government or Non- Government employer deducts the tax from the employee’s wages and deposit the same to the government.
Note- A professional tax imposed is subject to the exemption provided by the respective State to particular categories.