All About Gujarat Professional Tax & Amnesty Scheme- 2022

People are not so much aware about levy of Professional Tax in India. Each state has been given power to levy and collect professional tax from various categories of tax payers by constitution of India. Each state has its own act, rules and procedures for levy of professional tax. So, lots of non-compliances/confusions are there. Recently Gujarat Government has come out with amnesty scheme to give relief to such tax payers and regularize them. Here we try to give brief idea about Gujarat Professional Tax and Amnesty Scheme-2022.

What is Professional Tax?

• Gujarat Professional tax, Subject to the provisions of Article 276 of the constitution and of this Act, these shall be levied and collected tax on professional, trade, calling, and employment, imposed by the designated authorities for the benefits of Panchayats, Municipalities, Municipal Corporations as the case may be, the State.
• Every person engaged in any Profession, Trade, Calling or Employment and falling under one or the other of the classes mentioned in column 2 of Schedule I shall be liable to pay the tax to the Designated Authority at such rate fixed by it but not exceeding the amount mentioned against the class of such person in the said Schedule : Provided that the rates of tax for the class of persons mentioned in entry 1 of the said Schedule shall be fixed by the State Government by notification in the Official Gazette.
• The maximum amount that a designated authority can levy and collect is Rs. 2500 annually from any taxpayer.
• It is an additional tax on specified professionals, business establishment and on employees subject to provisions of the Act.
• The amount paid annually as professional tax qualifies as an allowable expenditure under the Income Tax Act, 1961.

Why Professional Tax?

• It is a state Tax imposed by State Government on account of infrastructure it provides to you so that you can carry out your profession/business in that state.
• It is much like a toll bridge, if you use the facility, you must pay a token amount.
• It is additional revenue for local authorities.

Who collects Professional Tax?

• It is levied and collected by State Government: However, for different cities, different municipal corporations, panchayats, etc. are authorized by the state government for collection of Professional Tax.
• Salaried Individual: Salaried individuals are liable to pay Professional Tax in Gujarat if salary/wages exceeds specified limit from time to time. Here, the employer deducts professional tax from the employee’s salary or taxable income and pays it to the designated authorities of Gujarat.

• Self-employed Individual/business: Self-employed   individual/partnership firm/company, etc. are liable to pay professional tax on their own to the designated authorities of Gujarat subject to provisions of the act.

How many types of Professional Taxes and Registration are there?

Levy of professional taxes in Gujarat are divided into various categories. Broadly there are two types of registration and taxes

1. Professional Tax On Business Establishment/Professionals

2. Professional Tax On Employees

 So anyone wants to start business in Gujarat, is required to get two types of certificate from designated authorities.

• T.E.C. (Professional Tax Enrollment Certificate): Every person Liable to pay tax under this Act (other than a person earning salary or wages, in respect of whom the tax is payable by his employer) shall obtain a certificate of enrollment from the prescribed authority in the prescribed manner.
• T.R.C. (Professional Tax Registration Certificate): Every Employer not being an officer of Government liable to pay tax shall obtain a certificate of registration from the prescribed authority in the prescribed manner.
• The Certificate in both the cases shall be obtained within 30 days becoming Liable.

What are the Rates of Professional Taxes?

1. If you have business establishment in Gujarat and having an employee then you need to get Registration Certificate as explained above and need to pay Professional Tax from time to time as follows:

• Professional Tax Rates for Employees

1. Old Rates 

Monthly Income of the Taxpayer	Professional Tax Amount Payable(per month)
For salary up to Rs.5,999	Nil
For salary between Rs.6,000 to Rs.8,999	Rs.80
For salary between Rs.9,000 to Rs.11,999	Rs.150
For salary of Rs.12,000 and above	Rs.200

2. New Rates (w.e.f. 01/04/2022)

Income of Taxpayer (Monthly)	Payable Professional Tax Amount (Monthly)
A) Salary & wages earners of the state government, Central Government, Panchayats, Public Sector Undertakings of the State & Central Government and Grant-In-Aids institutions whose monthly salaries or wages are:	Nil
i)    Up to Rs.12,000/-	Nil
ii)   More than Rs.12,000/-	₹ 200
B)  Salary & wages earners other than those mentioned in sub-entry (A) above, whose monthly salaries or wages are:
i)    Up to Rs.12,000/-	Nil
ii)   More than Rs.12,000/-	₹ 200

• Professional Tax Rates for Individuals/Firms(New Rates) (w.e.f. 01/04/2022)

Individuals/Firms	Minimum Rate of Professional Tax (Annual)
All advocates, architects, engineers, Chartered Accountants, solicitors, notary, doctors, consultants, tuitions and tutorial institutions, angadia, couriers, share brokers, contractors, brokers, tour and travel operators, advertising agencies, cable TV operators, health and recreation clubs, insurance agents, petrol pump owners, transporters, money lenders, video parlour, RTO agents, Co-operative Society etc. and all types of professional according to Finance Department notification dated on 01.04.2008.	₹ 2,500
Individuals or Professionals paying separately in more than one branch	₹ 2,500
All Private and Public Limited Companies, Partnership Firms, Banking Companies, Factory Owners, etc.	₹ 2,500
Suppliers as defined in the Gujarat Goods and Services Tax Act, 2017 (Gujarat 25 of 2017) whose annual gross turnover is- (i) not more than Rs.2,50,000/- (ii) more than Rs.2,50,000/- but not more than Rs.5,00,000/- (iii) more than Rs.5,00,000/- but not more than Rs.10,00,000/- (iv) more than Rs.10,00,000/- Explanation: For the purpose of this “turnover in State” shall mean turnover in State as defined in  the Gujarat Goods and Services Tax Act, 2017 (Gujarat 25 of 2017) during any financial year or part thereof.	Nil ₹ 2,500 ₹ 2,500 ₹ 2,500

When to File Professional Tax Return?

• The professional tax payment/collection process occurs both on a monthly and quarterly basis. If a company has more than 20 employees/staff, the employer or the business owners have to pay the amount within 15 of the following month.
• Alternatively, suppose a company has Less than 20 employees/staff. In that case, the employer or the business owner can pay the Professional Tax in Gujarat quarterly, i.e. before the 15th of the next month to the end of every quarter. Remember, here respective employer or the business owner must complete payment within 15 days after the end of the previous quarter.
• Therefore, the due dates of quarterly Professional Tax payment in Gujarat are as follows:

i. 15th July (for April to June quarter)

ii. 15th October (for July to September quarter)

iii. 15th January (for October to December quarter)

iv. 15th April (for January to March quarter)

If individuals fail to pay professional tax, they have to pay a late payment charge with a yearly interest of 18% of the total due amount, which is calculated on a daily basis.

• A company must register with each municipal corporation or Panchayat if it employs people in more than one municipality. Additionally, it must pay taxes to each municipal corporation separately. It can, however, submit a consolidated return of the municipalities. Although the registration form can be downloaded online, one must visit the municipal corporation to submit the form.

Different Types of Forms under Professional Tax:-

Form name	Description
Form 1	Employer’s Registration Form
Form 3	Application For a Certificate Of Enrolment / Revision Of    Certificate Of Enrolment
Form 4-A	Declaration To Be Furnished By An Employee To His   Employer or Employers
Form 5	Return Of Tax Payable By Employer
Form 5-A	Return Of Tax Payable By An Employer
Form 5-AA	Return Of Tax Payable By An Employer
Form 5-B	Application For Permission To Furnish Annual Return
Form 5-C	Application For Grant Permission To File Consolidated   Return
Form 5-CC	Application For Grant Permission To File Consolidated Return

 What is the Process of Payment of Professional Tax?

Every taxpayer can pay professional tax online at the respective websites of Municipal Corporation or designated authorities (Below is the Process for payment to Ahmedabad Municipal Corporation)

Online Payment Method:- 

• Step 1– Log in to the official website of Ahmedabad Municipal Corporation.
• Step 2– From the ‘Quick Pay Links’ box, select ‘Pay Professional Tax’.
• Step 3– Next, enter ‘Profession tax no’ and click on ‘Search’.

[Enrolled Number format: PEC014004000122 (Note: Number should start with “PEC01”)

Registered Number format: PRC014004001306 (Note: Number should start with “PRC01”)]

• Step 4– Select the ‘Pay’ option and choose a payment gateway as per your preference.

Offline Payment Method:- 

Through Cash/Cheque/Demand Draft in favor of “Municipal Commissioner     Ahmedabad”

Who is exempted from the Professional Tax in Gujarat?

1. In Gujarat, disabled people are exempt from paying Professional Tax. However, in order to obtain such exemptions, people must present a disability certificate.

2. An exemption is available to Professional Tax payer who has crossed the age of 65 years i.e. senior citizen.

3. People who earn up to Rs.12000 per month as Salary or Wages are exempted from paying the professional taxes.

Documents Required to Professional Tax Registration

There are a few mandatory documents one must produce to register for professional tax:

• Office tax bill & Receipt
• Owner ID proof
• Rental Agreement
• Two Passport size photo of owners
• Municipal Tax paid bill of business premises
• Owner residence Tax bill & receipt
• Memorandum Of Association, Articles Of Association and Incorporation Certificate
• Company PAN card copy
• Authorization letter
• All documents with stamp and sign by Owner / Manager

Documents Required by a Company to Register Tax Slab 2022-23

 Here are a few documents required by a company to register for professional tax:

• Copy of Articles and Memorandum of Association.
• Copy of Certificate of Incorporation.
• Two Address Proofs of director (Copy of Electricity bill and Passport/Driving License/Voter ID/Ration Card).
• Copy of Notarized Rental Agreement in English, in case of rented property, along with N.O.C. from property owner and maintenance bill.
• Copy of Sale Deed/Property Deed in English (in case of owned property).
• Passport size photograph of applicant (Please do not paste the photo on the printout of application.)
• Copy of PAN card of company and all directors.
• Cancelled company cheque.
• Municipal Tax paid bill of business premises
• Director residence Tax bill & receipt

What are the Benefits of Professional Tax Registration?

The benefits of Professional tax Registration is given below:

• Open a Bank Account

We don’t have any establishment certificate. So Professional tax registration certificate can be used as an evidence of business establishment in Gujarat and also you can open a bank account.

• Helps In Avoiding Penalty

It is compulsory to pay Professional tax as per the law. Hence, the timely payment of Professional tax can help avoid penalties and any punitive action against the employer or a self-employed person.

• Enables Smooth Registration Process 

Professional Tax Compliance is simple, which can enable a smooth and hassle-free Registration Process.

• Helps In The Implementation Of Development And Welfare Programs 

The Professional Tax acts as a revenue source for the state governments/local authority that helps the government to implement schemes for the various welfare and development of the region.

• Can Claim Deduction

The employer or the self-employed person can claim a deduction on paid professional tax.

PROFESSIONAL TAX AMNESTY SCHEME – 2022 

For the purpose of providing relief under the Professional Tax Act by the State Government and the pending cases are no longer pending and disposed of promptly for that Professional Tax Amnesty Scheme-2022 has been issued by the Government.

This scheme will be effective from the date of promulgation of the resolution i.e. from 06/10/2022 to 31/12/2022.

Most of the Traders and Professionals are not aware of this scheme and this is the golden opportunity for such people to get registered according to this scheme and get relief from interest, penalty and prosecution – pay tax and buy peace.

Following are the reliefs given to the Professionals and employers under this scheme:

a) Unregistered Professionals: A person or organization who is eligible for enrollment under any of the Entry no. 2 to 10 of Schedule 1 But the person or organization which is not yet registered should apply as per the rules to get Professional Tax number during the period of this scheme And if they pay the amount due at the prescribed rate during the said period, they will be issued an enrollment certificate immediately and shall be exempted from interest, penalty and prosecution.

b) Registered Professionals: Professionals who hold Enrollment Certificate under Professional Tax Act But who have not paid the Professional tax due to any reason, shall pay the amount of Professional tax due for the scheme period as per the prescribed rate as per the scheme, they will be exempted from interest, penalty and prosecution if they apply in the prescribed format during the scheme period.

c) Unregistered Employers: An employer appointee who has not obtained a registration certificate under the Professional tax Act and the tax not collected from the wage earners or deposited with the Designated Authority shall apply for registration during the scheme period And on payment of the amount due at the prescribed rate, they will be issued a registration certificate and exempted from interest, penalty and prosecution as may be assessed.

d) Registered Employers: Employers who have collected, but not deposited to the designated authority, Professional taxes from their employees they will be exempted from penal action if they pay the amount of tax arrears at the rate of 1.5% monthly with interest or the employers shall be exempted from interest and Prosecution if they have not collected the tax.

• Unregistered traders/employers desirous of availing the benefit of this Amnesty scheme should submit to the concerned Designated Authority in the prescribed Form 1.
• When the registered traders/employers have to apply before the concerned Designated Authority in the prescribed Form 2.

At the time of implementation of GST, so many indirect taxes were subsumed in GST However; taxes like Professional Tax are still in existence. For ease of doing business such taxes must be included in GST.

DISCLAIMER : The Views expressed by us are matter of opinion. The opinion is based on our understanding of law & regulations. Tax law is subject to continual change, at times on a retrospective basis and may result in incremental taxes, interest or penalties. We are not responsible for updating our views for changes in law or interpretation after the date hereof.