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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-
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:-
This is paid by the business entity, owner or a professional i.e. Private/ Public Limited Company, Sole Proprietor, Director Etc.
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.
The maximum amount an individual needs to pay as Professional Tax is Rs. 2500. The slab amount is generally based on the gross income of the professional. It happens to be deducted from his/ her income every month by the employer. The following state governments levy professional Tax in India:
Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhatisgarh, Kerala, Meghalaya, Orissa, Tripura, and Madhya Pradesh.
The amount deducted as Professional Tax by the employer from the salary/ wages has to deposit the same amount with the state Government.
The application for registration of Professional Tax must be submitted to the State Tax Department within 30 days of employing staff in a business. If there is more than one place of work, the application must be made separately to each authority considering the place of work coming under that authority's jurisdiction.
If there's a delay in Professional Tax, it can lead to a penalty of Rs. 5 per day. On non-payment or late payment, there will be a penalty of 10% of the Tax if there's the late filing of returns, a penalty of Rs. Three hundred will be imposed.
Professional Tax in India is applicable for the individuals and entities mentioned here :
Companies, Firms, Limited Liability Partnerships, Corporation, Societies, Huf, Associations, Clubs, Legal Practitioners, contractors, Architects, Engineers, Insurance Agents, Chartered Accountants, Company Secretaries, Surveyors, Tax consultants, management professionals as well as medical representatives such as doctors, etc.
Who is Exempted from paying Professional Tax?
The professional tax rules provide exemptions for a few individuals; the exemptions are different based on the state you belong to. The professional tax rules provide exemptions to the following:
Procedure for Professional Tax registration is a State-specific query. Further, depending on the State’s requirement, Professional tax returns also need to be filed at specified intervals. Professionals/Employer seeking professional tax registration shall follow these steps:-
The applicant can apply online through the CTD portal of specific state.
The applicant shall file the form along with the requisite document.
Applying In Offline Mode
One can also apply offline by submitting the application form along with the requisite documents and prescribed fee to the concerned State Government.
Once the applicant applied for registration, he/she should submit the physical copy to the concerned tax department.
On receipt of an application, the tax authority shall scrutinize it for its correctness.
After scrutinization, if the authority gets satisfied, it shall approve the same and issue the registration certificate to the applicant. In case if the department found a flaw in the application, it can definitely raise a queries that shall be responded on time.
For Professional Tax registrations, below mentioned documents are required-
Below mentioned are the benefits of Professional Tax, which are as follows:-
Professional tax is simple to comply with and the compliances relating to professional tax impose very few restrictions.
Professional tax payment is a legal requirement, and hence ignoring it can result in any penalty or prosecution. To avoid this penalty and prosecution, the self-employed person and employer pay their professional tax without any delay, as per the rates prescribed by their concerned state.
Professional tax is easy to get registered with simplified annual or monthly compliances.
The Professional Tax is a source of revenue for the state governments which helps in implementing schemes for the various welfare and development of the region
You will never have to deal with all your tax-related issues on your own again. Since you have tax professionals helping you with your tax-related work, you will never be alone again when it comes to your tax woes!
The deduction can be claimed of earlier paid professional tax on salary.
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22 Jul, 2021By Admin Taxupp