Professional Tax varies from state to state. There are different set of rules and regulations to govern the same depending upon the state; however, all states follow a slab system based on the income to levy professional tax. Further, Individuals carrying out freelancing business without any employees are required to obtain a Professional tax certificate according to the pecuniary threshold, if any, provided by the respective State Authorities.
Types of Professional Tax Certificates
The types of Professional Tax Certificates are enlisted below:
PTEC (Professional Tax Enrolment Certificate)
This type of professional tax is paid by the business entity, i.e. Private/ Public Limited Company, owner or a professional, i.e. Sole Proprietor or Director Etc. through this certificate
PTRC: (Professional Tax Registration Certificate)
Here, the Government or Non- Government employer deducts the tax from the employee’s salary and deposits the same to the government.
Benefits of Professional Tax Registration
The benefits of Professional tax Registration is given below:
Imposes Minimal Restriction
It is simple to comply with the Professional Tax Compliance, which results in a smooth registration process with minimum restrictions.
- It is compulsory to pay Professional tax as per the law. Hence, the timely payment of Professional tax can help avoid penalties and any punitive action against the employer or a self-employed person.
- Enables Smooth Registration Process
Professional Tax Compliance is simple, which can enable a smooth and hassle-free Registration Process.
- Helps In The Implementation Of Development And Welfare Programs
The Professional Tax acts as a revenue source for the state governments that helps the government to implement schemes for the various welfare and development of the region.
The employer or the self-employed person can claim a deduction on the previously paid professional tax.
Who are liable for Professional Tax Registration?
The liability of the payment of tax depends on the state where it is applicable; you can check the list of individuals who can apply for Professional Tax Registration:
- Individual;
- Public/Private/One person Company;
- Partnership;
- Co-operative Society;
- Association of Person;
- HUF (Hindu Undivided Family).
Essential Documents Required for Professional Tax Registration
The List Of Essential Documents Required For Professional Tax Registration Is Given Below:
- Application Form
- In case the applicant is a Company, the company's COI, AOA & MOA, and PAN. (Attested by the Director).
- Address proof and Identity proof of all directors, along with the passport size photo
- Bank account details of the Company along with a bank statement and cancelled cheque.
- Proof of Registered Office can be a rent agreement in the case of rented property, NOC from the owner.
- Board Resolution in case of a company-and the Declaration of consent by the concerned Partner In case of Partnership along with Salary and attendance register.
Procedure for Professional Tax Registration
The procedure for Professional Tax Registration depends from state to state. Further, Returns must also be filed at specified intervals depending on the State’s requirement. Professionals /Employers seeking professional tax registration shall follow the below-mentioned procedure.
Step 1: Filing The Application With Necessary Documents
The applicant must file the application form and the requisite documents.
Step 2: Submitting The Application To The Concerned State Government & Tax Department
The applicant needs to submit the Application with the necessary documents to the concerned state government. A copy of the same should also be submitted to the tax department.
Step 3: Scrutinization By The Tax Authority: On receipt of an application, the tax authority shall scrutinize the application to ensure that all the information is correct.
Step 4: Issue Of Registration Certificate: The authority will issue the Registration certificate after successfully scrutinising all the documents.