Professional Tax Applicability
Professional tax is levied on all types of trades and professions in India. It has to be paid compulsorily by every staff member who is employed in any private firm operating in India. Professional tax registration is the onus of every business owner, who must take up responsibility for deduction of professional tax and payment for the same
Professional Tax Variation With Each State
Professional tax fee will also have different rates that tend to differ from state to state. The state governments which are levying state tax are West Bengal, Maharashtra, Karnataka, Kerala, Assam, Madhya Pradesh, Orissa, Tripura, Meghalaya, and Gujarat.
Professional Tax For Self-Employed
Any professional who obtains a monthly regular income will need to pay the professional tax. By the word professional, we mean people employed in specialized fields such as accountancy, media, etc.
They can fill the form and get a registration number first. Then, using that number, they can pay their taxes in the corresponding banks.
In certain states in India, specifically , Maharashtra Profession Tax Act amended from 1.4.2018, Now a Limited Liability Partnership and each partner of LLP shall be liable to pay PT of Rs. 2,500/- per annum.
Who are exempted from paying Professional Tax?
The Professional Tax Rules provide exemptions to the following individuals
- Parents of children suffering from mental or permanent disability.
- Members of the armed forces ( as designated in the Air Force Act, Navy Act and Army Act ) including members of auxiliary forces/reservists, serving in a particular state.
- Individuals with permanent physical disability ( inclusive of blindness)
- Individuals over the age of 65.
- Badli workers engaged in the textile industry
- Women engaged exclusively as an agent under the Directorate of Small Savings or Mahila Pradhan Kshetriya Bachat Yojana.
- Guardians or parents of mentally challenged individuals
Why pay Professional Taxes? Benefits
Here are the reasons why one should never miss a professional tax payment
It Is A Judicial Requirements
As per the rules and regulations of India, every employee is bound to make the professional tax payment without fail. Employers in many states of India are strictly bound by the judiciary to obtain the registration of professional tax. After the registration, they have to make the deductions and pay the service taxes of all the employees who work under them.
To Avoid Paying Penalties
Failure to professional tax registration results in huge penalties that keep on increasing over time.
Easy To Comply
When something is easy to comply, it won’t be difficult to follow. The professional tax regulations are so easy to follow that and not difficult to comply with. The registration procedures can be done quickly and the further proceedings are also much easier.
Deductions
Deductions can be claimed in the salary on the basis of the professional tax paid. The deductions will be allowed in the year corresponding to which the taxpayer made the payments.
The State Government Tax
The local authorities and the state government have the right to collect all the professional taxes based on employment, profession trades and much more. The collected amount of professional tax per annum should not go beyond Rs. 2500 per an annum.
Professional Tax Registration Process in India
The professional tax registration procedure is very easy. Here are three important points that one needs to know and understand in detail.
Varies According To State
In case you are a business owner and have employees under different states working for you, then you will have to get a professional tax registration for all the states. The tax slab rates can vary from one state to another. This can make it a cumbersome task for small-scale industries. Many states in North India do not have professional taxes.
The Frequency Of Filing Returns
The frequency with which one needs to file returns will depend on the state the person resides in. Hence, before filing for a return it is important to know the rules of the state.
The Penalties That Await
Professional tax is applicable to all types of business entities. Professional tax can be calculated on the basis of self-assessment. It mainly depends on the professional or employee’s gross income in the half-yearly stage.
If you are a person who owns a trade or employs staff in your company or is a working professional, then you will have to register at the tax authority of the State’s professional tax department. The employer is also responsible for deducting the professional tax from his/her employee’s salary. The deducted amount shall be paid to the government when the employer files their professional tax return.
Whether you belong to the category of a professional who is also self-employed or you employ people for your business Vakilsearch can help you with Professional tax registration. Our Chartered Accountants and taxation professionals will offer you the right guidance and file the returns on your behalf.
The Maharashtra government, for instance, can levy a penalty of about 10 percent the amount which was delayed. Hence, the more one avoids paying the registration, the more they will have to worry about the penalties.
Steps involved in Online Professional Tax Registration
One Working Day
Within one working day, you will have to provide your PAN card, address proof and identity proofs of all the directors/partners/proprietors of the company. You also need to furnish the details of all employees working under you.
Two Working Days
The application form for professional tax will be then filled up by the employees and then submitted to the concerned authorities by our expert affiliates. If the documents are all provided in order, then the process will not take more than two working days.
Seven Working Days
Within five to seven working days, the basic acknowledgment will be provided by us. In case the documents are not in proper order, the inspector will ask for the missing documents. As soon as you provide the missing ones, the process will be completed. The registration hard copy will be issued within 10 days in all the major cities. In other places, it might take up to 15 to 20 working days.
Understanding the Professional Tax Registration Applicability
Firms/ Company/LLP
In the case of professional tax, firms/LLP/corporations/societies/HUF/ associations/clubs/company will be considered as a taxable entity. All the branches involved in these will also be considered as a separate individual in front of the tax payment/ department of professional tax
Individual People (Professionals)
The legal practitioners like notaries and solicitors, medical representatives like dentists, medical consultants, doctors, and other professionals like management consultants, tax consultants, surveyors, company secretaries, chartered accountants, insurance agents, engineers, architects and contractors are all considered as professional individuals who need to pay professional tax.
Partners And Directors
People who act as company directors, firm partners, LLP partners and designated partners should pay professional tax. They should register under the Professional Tax Act within 30 days of getting appointed in these roles.
Documents required for Professional Tax Ragistration
In India, Professional Tax Ragistration cannot be done without proper identity and address proof. These documents will be needed for all the directors and the shareholders of the company to be incorporated. Listed below are the documents that are accepted by MCA for the online company registration process acceptable.
Identity And Address Proof
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
- Scanned passport-sized photograph specimen signature (blank document with signature [directors only])
For the foreign nationals, an apostilled or notarized copy of the passport has to be submitted mandatorily. All documents submitted should be valid. The residence proof documents like the bank statement or the electricity bill must be less than 2 months old.
Registered Office Proof
For online company registration in India, the company must have a registered office in India. To prove admittance to the registered office, a recent copy of an electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill or the sale deed and a letter from the landlord with her/his consent to use the office as a registered office of the company should be submitted.
- Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
- Scanned copy of Notarized rental agreement in English
- Scanned copy of No-objection certificate from the property owner
- Scanned copy of sale deed/property deed in English (in case of owned property)
Note: Your registered office need not be a commercial space; it can be your residence too.
