Professional Tax Registration Applicability
Professional Tax
If you ever pay close attention to your pay slips, you will notice that there is a deduction every month under the category of ‘Professional Tax’. This deduction takes place along with HRA, basic salary, and conveyance charges (if applicable).
What is Professional Tax?
Professional tax is a tax that is levied by a state government on all individuals who earn a living through any medium. This should not be confused with the definition of professionals that indicates people such as doctors. This is a tax that is to be paid by every single earning individual. The calculation and amount collected may differ from one state to another but it has a limit of Rs. 2500 per year.
Why is it different for different people?
Since it is a tax that is levied by the state government, it tends to differ from one state to another. Each state has a slab that it declares and the professional tax is deducted based on these slabs. Some states and union territories do not charge professional tax too. How it is paid is by dividing the annual professional tax due into 12 equal installments that are paid every month, except the one paid in February which is higher than the other months.
There may also be situations where sources of income falling under different sectors will also be liable for a separate tax. For example, in some states, a person running a business in the transport sector may be required to pay a professional tax of about Rs. 50 per annum for each of the vehicles owned and it may be subject to a cap of Rs. 1,000 per annum.
Who Collects Professional Tax?
Professional tax is collected by the employers from the monthly salaries. It is then paid by them to the government failing which they can have penalties imposed on them for not collecting or failing to pay the professional tax. If you are not working for anyone then you are liable to pay the professional tax yourself.
For professionals not working with an employer they can register for it by applying through a form. Once the form is received, a registration number will be issue to the individual. Payment of the professional tax can be made under these registration numbers at banks. It is also worth noting that, in some states, the government also provides rebates on the taxes if it is paid in a lump sum for a few years together so it is worth enquiring about the rules of professional tax in your state.
Professional Tax Applicability
Professional Tax is applicable for the below-mentioned individuals and entities:
- Companies
- Firms
- LLPs
- Corporation
- Societies
- HUF
- Associations
- Clubs
- Legal practitioners such as solicitors
- Contractors
- Architects
- Engineers
- Insurance agents
- Chartered Accountants
- CS
- Surveyors
- Tax consultants
- Management consultants
- Medical representatives such as doctors, medical consultants, and dentists
Professional Tax Slabs in Various States
Since each state tends to have its own slab for professional taxes, here are the tax slabs for various states and union territories in India.
Professional Tax in Maharashtra
|
| Up to Rs.7,500 for men | Nil |
| Up to Rs.10,000 for women | Nil |
| Rs.7,501 to Rs.10,000 | Rs.175 |
| Rs.10,000 and above | Rs.200 for 12 months and Rs.300 for the last month |
Professional Tax in Karnataka
|
| Up to Rs.14,999 | Nil |
| More than 15,000 | Rs.200 |
Professional Tax in West Bengal
|
| Up to Rs.10,000 | Nil |
| Rs.10,001 to Rs.15,000 | Rs.110 |
| Rs.15,001 to Rs.25,000 | Rs.130 |
| Rs.25,001 to Rs.40,000 | Rs.150 |
| More than Rs.40,000 | Rs.200 |
Professional Tax in Madhya Pradesh
|
| Up to Rs.18,750 | Nil |
| Rs.18,751 to Rs.25,000 | Rs.125 |
| Rs.25,001 to Rs.33,333 | Rs.167 |
| Rs.33,334 and above | Rs.208 for 11 months and Rs.212 for the last month |
Professional Tax in Tamil Nadu
|
| Up to Rs.3,500 | Nil |
| Rs.3,5001 to Rs.5,000 | Rs.22.5 |
| Rs.5,001 to Rs.7,500 | Rs.52.5 |
| Rs.7,501 to Rs.10,000 | Rs.115 |
| Rs.10,001 to Rs.12,500 | Rs.171 |
| Above Rs.12,500 | Rs.208 |
Professional Tax in Andhra Pradesh
|
| Up to Rs.15,000 | Nil |
| Rs.15,001 to Rs.20,000 | Rs.150 |
| Above Rs.20,000 | Rs.200 |
Professional Tax in Gujarat
|
| Up to Rs.5,999 | Nil |
| Rs.6,000 to Rs.8,999 | Rs.80 |
| Rs.9,000 to Rs.11,999 | Rs.150 |
| Rs.12,000 and above | Rs. 200 |
Professional Tax in Odisha
|
| Up to Rs.13,304 | Nil |
| Rs.13,305 to Rs.25,000 | Rs.125 |
| Rs.25,001 and above | Rs.200 for 12 months and Rs.300 for the last month
|
Exemption in Professional Tax
The below-mentioned individuals need not pay Professional Tax:
- Individuals who run educational institutions that teach classes up to twelfth standard.
- Individuals in the Central Para Military Force (CPMF).
- An individual who has one child and has undergone a sterilization operation. However, the relevant documents must be submitted.
- Any ex-serviceman who comes under SI No.1 (Schedule)
- Any handicapped individual who has at least a 40% disability. However, the relevant certificate must be submitted.
- Individuals who have a permit for a single three-wheeler or a single taxi to carry goods.
- Deaf, dumb, and blind individuals who are earning a salary.
- Civilian non-combatant and combatant members who are part of the Armed Forces. However, the Army Act must govern the Armed Forces.
- Foreign technicians who have been employed by the state.
- All philanthropic and charitable hospitals that are present in places that come under below taluk level.
Created & Posted By Ravi Kumar
CA Article at TAXAJ
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