Frequently asked question on Profession Tax (PT) in Maharashtra

1. Who is liable to pay Profession Tax?

Every person engaged actively or otherwise in any profession, trade, callings or employment and falling under one or the other of the classes mentioned in the second column of Schedule I appended to Profession Tax Act, is liable to pay Profession Tax.

2. What are the categories of persons liable for Profession Tax?

Ans.  The categories of persons liable for Profession Tax are any individual, a Hindu Undivided Family, firm, company, corporation or other corporate body, any society, club or association.

3. What is registration certificate for profession tax and what is enrolment Certificate?

Ans.  Every employer, other than Government officer, who is liable to deduct and pay Profession Tax on behalf his employees, is given a registration certificate. Every person liable to pay profession tax, other than a person whose profession tax is payable and paid by his employer, is given a enrolment certificate i.e. enrolment certificate is issued to an individual person, company, society etc as the case may be only while registration certificate may be issued to any of categories of persons described at serial no.2.

4. Who can apply for registration certificate?

Ans.  Any of the categories of person described at Sr. No. 2, who is paying salary or wages to one or more employee, wherein this salary or wages paid to anyone or more employees exceeds Rs. 5000/- per month, is liable for registration under Profession Tax Act. Such a person can only apply for registration certificate.

5. Who can apply for enrolment certificate?

Ans.  Every person who is liable to pay profession tax other than a person whose profession tax is payable and paid by his employer is liable for enrolment, which means a person engaged in a profession described at column no. 2 of the Schedule I at Sr. No. 2 and onwards has to apply for enrolment. Similarly an Indian citizen in the employment of any diplomat or consular office or trade commissioner of any foreign country situated in any part of the Maharashtra State, if liable to pay tax, has to apply for enrolment. Also an employee earning total salary or wages exceeding Rs. 5000/- from two or more employers who do not deduct and pay Profession Tax on his behalf, has to obtain enrolment certificate.

6. Where to apply for registration/enrolment?

Ans.  The application for registration or enrolment is to be made to the concerned registration authority for Profession Tax, at Vikrikar Bhavan, Mazgaon by the applicants based in Mumbai or at the nearest Sales Tax office of the district, by the persons who are based out side Mumbai.

7. If the dealer is registered under MVAT Act, then is it necessary to be registered under Profession Tax Act?

Ans.  Yes , it is necessary for a Registered dealer under MVAT Act to obtain registration under Profession Tax Act ,if he has employed one or more persons who are drawing salary in excess of Rs. 5000/- per month.

8 Can those employing wage earners get a registration certificate?

Ans.  Yes, they can get Registration Certificate if they are employing wage earners on regular basis, as only persons earning wages on casual basis are not liable to pay profession tax.

9 What is the time limit for obtaining Registration Certificate as an employer?

Ans.  An employer, who wishes to obtain Registration Certificate, has to apply for the same within thirty days of his becoming liable to pay tax.

10. What is the penalty for furnishing wrong information’s?

Ans.  The penalty prescribed as per section 5(6) for giving false information in application for Registration Certificate or Enrolment Certificate is equal to three times the tax payable under the Profession Tax Act.

11. Where and how much Profession Tax is to be paid?

Ans.  The Profession Tax can be paid according to Schedule I appended to the act at any of the places defined as ‘treasury’ in rule 2(7).

12.  What is the rate of interest for late payment?

Ans.  The rate of interest is one and quarter percent per month of the amount of such belatedly paid tax.

13. Are self employed persons eligible to get enrolment certificate?

Ans.  The self employed persons who are covered by any one of the entries mentioned at Sr. No. 2 and onwards in the schedule I appended to the Profession Tax Act, are eligible to get enrolment certificate.

14 Are medical practitioners, commission agents and partners of firms eligible for enrolment certificate?

Ans.  Yes, they are eligible as follows:-

15 Is there any facility of making lump sum payment of Profession Tax?

Ans.  Yes, there is a facility of making lump sum payments for Enrolment Certificate holder who is liable to pay tax at the rate of Rupees 2500 per annum.

16. What are the advantages of making lump sum payment of tax?

Ans.  The Enrolment Certificate holder can discharge his liability for the next five years by making payment in advance of a lump sum amount equal to four times of such rate of tax on or before 30th June, so advantage in paying lump sum is that of, saving of one year’s liability.

17. What type of incentives will be available after making such lump sum payment?

Ans.  The incentive is that any increase in tax liability in future during those five years shall not vary the tax liability i.e. Such a Enrolment Certificate holder will not have to pay any additional amount on account of increase in rate of tax during those five years.

18.  Who is assessed under Profession Tax Act?

Ans.  An employer liable to pay Profession Tax is assessed under Profession Tax Act.

19.  What are the rates of tax under Profession Tax Act?

Ans.  The rates of tax under the Profession Tax are given in the schedule I appended to the Act, which may kindly be referred.

20.  On what basis Profession Tax shall be calculated?

Ans.  Profession Tax shall be calculated at the rate mentioned in Schedule I at Sr. No. 1, on the basis of salary or wages earned per month by the employees and for others it shall be calculated at the rate mentioned in front of their corresponding entry in Schedule I.

21.  If there is no previous year in the profession then what will be the rate  of Profession Tax?

Ans.  Only for the purpose of Entry 8 pertaining to dealers registered under MVAT Act or only under CST Act, if there is no previous year for such dealer, the rate of the tax shall be Rs.2000.

For persons covered by other entries there is no concession available once the person becomes liable to pay tax except persons covered by entry no.2 and entry no.4, who are not liable to pay tax during first year of standing in profession.

22 Who can get exemption from Profession Tax?

Ans.  Exemptions from paying profession tax is granted to:-

1. Members of defense as defined in Army Act 1950,Airforce Act 1950,Navy Act 1950 reserve and auxiliary services drawing pay and allowances under the budgetary allocations of Defense Services excluding persons drawing pay and allowances from the establishments of Defense Ordinance Factories situated in any part of the Maharashtra State,

2. the badli workers in the textile industry,

3. any person suffering from permanent physical disability as specified in rule 32(1),

4. Women exclusively engaged as agents under Mahila Pradhan Kshetriya Bachat Yojana of Directorate of Small Savings,

5. Parents or Guardian of any person suffering from mental retardation specified in rule 32(2),

6. Person who has completed the age of sixty five years,

7. Parents or guardians of a child suffering from a physical disability as specified in rule 32(1).

23. Whether it is necessary to submit medical certificate for exemption from Profession Tax?

Ans.  If the exemption is claimed on account of self physical disability OR physical or mental disability of a ward, it is necessary to submit medical certificate issued by a doctor working in the Government Hospital.

24 Can parents/Guardians of physically handicapped children get exemption from Profession Tax?

Ans.  Yes, parents/ guardians of physically handicapped child can get exemption provided that the physical disability is as specified in rule 32(1).

25 Who is appellate authority under Profession Tax Act?

Ans.  For first appeal against any order passed by Profession Tax Officer, in Mumbai, the appellate authority is Deputy Commissioner of appeal (P-2), Mazgaon, while for areas outside Mumbai the respective Deputy Commissioner of appeal in that area is the first appellate authority. Against the order passed by Deputy Commissioner of appeal the next appeal is to filed with the concerned Joint Commissioner of appeal of that area.

The appeal against the order passed by any officer not below the rank of Joint Commissioner is to be filed with Maharashtra Sales Tax Tribunal, Mumbai.