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Professional Taxes Overview
The State government levies a tax known as the "professional tax" on all salaried people. All working professionals, including chartered accountants, attorneys, and physicians, are subject to professional tax. It is assessed in accordance with the person's employment, trade, or profession. All states have different tax rates, but the maximum amount of professional tax that can be assessed annually is Rs. 2,500.
Benefits of Professional Taxes
It Is a Judicial Prerequisite
Every employee must pay the professional tax on time and without fail in accordance with Indian laws and regulations. In many Indian states, employers are under strong legal obligation to register for professional tax. They are required to deduct and pay the service taxes for each employee they employ after registration.
How to Avoid Penalties
Huge penalties that keep growing over time arise from failure to register as a professional taxpayer.
Easy To Comply
It won't be difficult to follow something that is simple to comply with. The rules governing professional taxes are very simple to understand and adhere to. The registration process can be completed fast, and the subsequent steps are significantly simpler.
Deductions
Deductions Based on the professional tax that was paid, deductions may be claimed from the remuneration. The year that corresponds to the year that the taxpayer made the contributions will be used for the deductions.
The State Government Tax
The state government and municipal governments are authorised to collect all professional taxes based on employment, trades, and other factors. The total amount of professional tax collected each year should not exceed Rs. 2500.
Documents required for professional tax Registration
Acknowledgement of the online form, along with the print out of the digital form submitted.
- Copy of PAN Card.
- Residence proof of Partner, Director, Proprietor.
- Proof of Constitution of business like Certificate of Incorporation.
- Address proof of Business place.
- Blank Cancelled Cheque.
- Establishment Certificate.
- PAN& PTEC details.
FAQ
What is professional tax and when is it levied?
A state-level tax known as professional tax is levied on income obtained from a profession, trade, calling, or job. The tax is calculated using slabs based on the income of people who may be self-employed or employed by an organization. The amount of tax that can currently be imposed is limited to Rs. 2500.
Who is liable to pay Profession Tax as employer?
According to the Schedule to the Profession Tax Act, every employer is required to withhold profession tax from the salaries and wages paid to their employees and to pay the profession tax that has been withheld.
Is Professional tax imposed in every state in India?
Only the states of Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamilnadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim are subject to professional taxes.
Who is required to obtain a Certificate of Registration (RC)?
A Certificate of Registration is required for any employer who is responsible for paying profession tax on behalf of the employees they pay salary or wages to within the taxable limit.
What are the advantages of payment of tax?
The holder of an enrolment certificate may eliminate his need to pay taxes for the subsequent five years by paying a lump sum that is equal to four times the applicable tax rate on or before June 30, giving the advantage of eliminating one year's obligation.
What is the penalty for furnishing wrong information?
For providing incorrect information in an application for a Registration Certificate or Enrolment Certificate, the penalty set forth in section 5(6) is three times the amount due under the Profession Tax Act.
On which date an employer becomes liable to pay tax?
The first time the employer pays any of his employees a salary or wage that is within the taxable limit is when responsibility arises.
Which will come under the scope of salary and wages?
According to section 17 of the Income Tax Act of 1961 (43 of 1961), "salary" or "wage" includes pay, dearness allowance, and all other remunerations received by a person on a regular basis, whether paid in cash or in kind, as well as perquisites and profits in lieu of salary; the phrase "on regular basis" means for a period longer than 180 days in a year.
Who is responsible for deducting the tax and depositing the same with the Government?
Individuals who are self-employed are responsible for paying their own taxes. Employers are responsible in cases involving employees.
Which are the specific cities where the service will be delivered?
In the event that you require a shop license, the service is state-specific and will only be provided in the following cities: Mumbai, Gurgaon, Hyderabad, Kolkata, Jaipur, Surat, Bangalore, Chandigarh, Pune, and Delhi.