Professional Tax: Enrolment, Registration & Payment

Wednesday, April 3rd, 2019 Amritesh 15 responses 485 Views

Professional tax (PT) is levied by the State Governments in India on salaried individuals, working in government or non-government entities, or in practice of any profession, including chartered accountants, doctors, lawyers etc or are involved in business. States were conferred the power of leveling the Tax under Clause (2) of Article 276 of Constitution of India,1949. The rate at which PT is charged is based on the Income Slabs set by the respective State Governments. However the maximum Professional Tax that can be levied by any State till date is Rs 2500/-. The total amount paid as PT during the year is allowed as Deduction under the Income Tax Act. The professional tax is a source of revenue for the State Governments, used in implementing schemes for the welfare and development of the region.

Professional Tax is deducted from the salary of Employees by the Employers and same is deposited with the respective Local Body or Competent Authority appointed for the purpose. Self Employed Professionals, Partnership firms, Business Owners, Companies (it may include Associations, Corporations and Entities as covered under Act) are required to directly pay the same based on the previous year turnover or as per the rate fixed by respective State, wherein the Business is being carried out. Such entities are required to pay the tax directly to the Commercial Department of the respective State, or through the Local Body appointed for the same.

Individuals and Business Houses, may consult their Tax Advisors or visit the respective State Commercial Tax Department (Sales Tax) Office or the Official web portal for complete details regarding Professional Tax.

Business and Professionals required to pay tax may be divided in two categories,

1.) *Persons engaged in Business, Trade, Professions, Callings and Employment

2.) **Employers (including Government, Public, Private Sectors, paying Salary/Wages to Employees)

Self Employed Professionals and Traders need to apply for Enrolment Certificate as per the provisions to carry out their business in the respective State.

Whereas, Certificate of Registration is required for Entities, employing Individuals as employees in lieu of Salary/Wages. Such Employers are required to deduct Professional Tax as per existing Slab and deposit the same to the prescribed Authority.

Thus, Registration is required in respect of Individuals employed, while Enrolment is required in relation to Business, Trade or Profession.

Please note that since Professional Tax is State subject, norms for Enrolment, Registration, Payment, Return, Assessment, Exemption may vary from State to State. However, this post attempts to give an insight about the process.

State Wise PT Slabs For the Financial Year 2019-20

Professional Tax Enrolment and Registration

Certificate of Enrolment is applicable to any Persons engaged in Business, Trade, Professions, Callings and Employment. A person liable to pay Professional Tax is required to apply for enrolment in the respective State, wherein the business is undertaken. All the relevant details related to business along with Branches within the State should be provided along with payment of Professional Tax as per the schedule. Failure to do so may attract fine, penalty or even imprisonment as per the provisions of the Act.

Certificate of Registration is applicable to any Employer liable to deduct Professional Tax from the Salary/Wages of the employees respectively. Such Employer is required to apply for Certificate of Registration, The application should be made within the stipulated time frame allowed for the purpose. Failure to obtain registration within the specified time frame may attract fine, penalty or even imprisonment as per the provisions of the Act.

Deduction of Professional Tax by The Employer

Employers are responsible to deduct the Professional Tax from the Salaries/Wages of the respective Employees and deposit the same with the concerned authority. The deduction of PT is as per the Slabs & Rates applicable for the Financial Year as notified by the competent authority. Annual Return in respect of the Employees also needs to be filed by the Employer.

Professional Tax Payment

Professional Tax may be paid online or via the offline mode, as prescribed by the Competent Authority. Normally, for Enrolled entities/persons, the PT is required to be paid within the current Financial Year or the date notified for the same.

Registered Employers are required to pay the tax on monthly or semi-annual basis, on behalf of the employees. Interest and Penalty is levied in case one fails to make the payment within the cut-off date.

Professional Tax Return

All Registered Employers are required to file return on Annual basis. Return is filed in respect of the PT deposited during the Financial Year in respect of the Employees paid Salary/Wages. The Return is filed at the end of Financial Year, it also provides an opportunity to the Registered Employer to rectify errors and omissions, if any, within the due date.

Enrolled Persons and Entities are not required to file return.

Professional Tax Assessment

Assessment of Professional Tax is also possible, in case the Business/Professional fails to get registered, deposit the tax amount, or file returns. Also in case of the Prescribed Authority is not satisfied that the return filed by the Registered Employer is correct or complete.

Provisions for appeal, amendment, cancellation, surrender of Enrollment & Registration is also available under the Act.

Professional Tax Exemption

State Government may exempt, reduce the PT rates for any class of persons by issuing notifications.

This article is for sharing personal views only. Readers are advised to research further and consult a Tax Expert to have more clarity on the topic.

mm
Amritesh is an experienced professional in the field of HR, Finance and Compliance. He is currently working in the IT Industry with an US based firm. He took up Blogging as a hobby which eventually turned into passion. He primarily focuses on topics related to Personal Finance, HR, Compliance and Technology.

All the opinions/suggestions/views expressed on this blog are just for sharing information. Readers are requested to consult their respective financial advisers and experts before taking any decision. Views shared through post or comments are personal opinion meant for reference of the readers. These should not be considered as Investment Advice or Legal Opinion. The Blog or the Author does not take any responsibility regarding any such action taken by any Individual.
Amritesh on FacebookAmritesh on GoogleAmritesh on InstagramAmritesh on LinkedinAmritesh on PinterestAmritesh on TwitterAmritesh on Youtube

Leave a Reply

Your email address will not be published. Required fields are marked *

15
Leave a Reply

avatar
8 Comment threads
7 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
7 Comment authors
priyank megotiaPRIYAnaveenMehul kumarmm Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
GOVINDA RAJULU
Guest
GOVINDA RAJULU

Dear Sir,
Please clarify that is there any carry forwarding provision for earnings of employee gross salary for calculating PT .

BHUPENDRA DAHYABHAI RAWAT
Guest
BHUPENDRA DAHYABHAI RAWAT

how many F.Y. profession tax assessment done at a time by department?

Mehul kumar
Guest
Mehul kumar

Retired Army person,Ex-serviceman Exemption from P TAX ?

Kian
Guest
Kian

bookmarked!!, I really like your web site!

naveen
Guest
naveen

Whether this proffessional tax is filed for only at the end of the year or monthly, if monthly what is the due date, if yearly what is the due date?

PRIYA
Guest
PRIYA

HOW TO MAKE PAYMENT OF PROFESSIONAL TAX OF 2018IF I REGISTER 2019

PRIYA
Guest
PRIYA

IN CREATE CHALLAN OPTION 2019 IS ONE OPTION AND 2020 IS ANOTHER OPTION HOW COULD WE MAKE PAYMENT OF 2018 CHALLAN

priyank megotia
Guest
priyank megotia

IS P TAX ON GROSS SALARY OR BASIC SALARY?