A complete guide on What is Professional Tax in India?, Professional Tax Slab in Different States and Professional Tax Applicability

Introduction

We will discuss Professional Tax in India, Professional Tax Slabs in Different States, documents required for Professional Tax Registration in India, and Professional Tax Applicability States in India in this article. For salaried employees, the employer deducts Professional Tax and pays it to the State Government’s appropriate department. Self-employed individuals must get a ‘Certificate of Enrolment’ from the applicable State organisation in order to pay the Professional Tax.

What is Professional Tax in India?

Professional Tax is not a tax imposed just on professionals, as the word implies. Any person who earns a living through a profession, employment, trade, or any other way through which they earn an income is subject to this tax. The right to impose and collect Professional Tax is granted to the State Government under the provisions of Clause (2) of Article 276 of the Indian Constitution.

Similarly, many Indian states have chosen not to exercise this right. This tax is charged in all other states where it is appropriate, based on Professional Tax slab rates enacted by the individual States. No state, however, can impose a Professional Tax on any taxpayer over 2,500 INR. According to the Income Tax Act of 1961, Professional Tax payments can be deducted from taxable income.

Professional Tax Applicability

The following groups of people are subject to the profession tax applicability:

• Salaried Individual
• HUF (Hindu Undivided Family)

Whether incorporated or not, a firm / cooperative society / company / association of persons or a group of individuals. 

States where Professional Tax is Applicable

Some of the Indian states and union territories where professional applicable is levied are listed below:

• Gujarat
• Maharashtra
• Andhra Pradesh
• Kerala
• Karnataka
• Assam
• Tamilnadu
• Tripura
• Meghalaya
• Bihar
• Chattisgarh
• Sikkim
• Puducherry
• Madhya Pradesh
• Tripura
• Manipur
• Jharkhand
• Mizoram
• Odisha
• Telangana

Authority that collects Professional Tax

Employers deduct professional tax from employees’ monthly salaries. They must then pay the professional tax to the government or face penalties for failing to collect or pay the tax. If you are self-employed, you are responsible for paying the professional tax.

Professionals who do not work for an employer might apply for it by filling out a form. The individual will be given a registration number once the form is submitted. Professional tax payments can be paid at banks using these registration numbers. It’s also worth mentioning that in some jurisdictions, the government will give you a tax break if you pay all of your taxes in one go for a few years, therefore it is important for a taxpayer to know the tax brackets of their states.

Professional Tax Slabs in Different States

• Professional Tax in Gujarat

• Professional Tax in Maharashtra

• Professional Tax in West Bengal

• Professional Tax in Odisha

• Professional Tax in MP (Madhya Pradesh)

• Professional Tax in Andhra Pradesh

• Professional Tax in Karnataka 

• Professional Tax in Tamil Nadu

• Professional Tax in Bihar

• Professional Tax in Goa

• Professional Tax in Jharkhand

• Professional Tax in Manipur

Documents Required for Professional Tax Registration in India

Below are the list of documents that is required for Professional Tax Registration in India:

• A copy of your company’s PAN card
• Certificate of Registration
• A copy of the Memorandum of Association (MOA) and Articles of Association (AOA).
• List of the company’s directors and partners.
• Directors/Partners must provide proof of their identity and address.
• A copy of the Board of Directors’ Resolution.
• Employees’ list.
• Proof of address/lease agreement for registered office/warehouse.
• Electricity/Maintenance Bill for the registered office, factory, or warehouse.
• Cancelled Bank Account Cheque.

Within 30 days of the employee’s first day on the job, the employer must apply for registration. If the office is located in more than two states, different applications must be submitted to the appropriate authorities in each state.

Conclusion

The state government levies a tax on professionals. This tax is not imposed by all states, and only a few of them collect it. This tax generates income for the states that levy it. A penalty of INR 5/- per day is imposed for failure to get a Professional Tax Registration Certificate. If you pay your Professional Tax late or do not pay it at all, you will be fined 10 percent of the amount you owe. It charges a penalty of INR 300 per return if returns are filed late.