Summary: The Punjab State Development Tax Act, 2018, as amended by the 2025 Bill, establishes a development tax for individuals and entities engaged in professions, trades, or employment within the state. The tax applies to income taxpayers whose income exceeds the basic exemption limit, with senior citizens being exempt. The tax rate is Rs. 200 per month, or a lump sum ofRs. 2,200 annually, and can be paid monthly by the individual or deducted by their employer. Employers are responsible for registering and deducting the tax from their employees’ salaries, unless the employee opts to pay it directly. The Act outlines penalties for non-compliance, with updated fines for offenses like delayed registration or filing. The legal framework also specifies rules for assessment, appeals, and recovery of tax, and clarifies liability in cases of death, business transfers, or dissolution of firms.
Punjab State Development Tax Act, 2018 (As amended by PSDT Amendment Bill, 2025) At a Glance
Key Definitions: Employee & Person
Employee
- Center/Punjab Govt. employees in Punjab or Punjab Govt. employees working elsewhere.
- Individuals paid from Punjab state revenue, regardless of work location.
- Persons employed by entities not covered above.
Person
- Engaged in any profession, trade, or employment.
- Includes various entities: Individual, HUF, Company, Firm, LLP, AOP/BOI, etc.
- Excludes casual wage earners and agriculturists selling only Punjab-land produce.
Salary: Includes pay, wages, allowances, perquisites, and other remuneration, excluding gratuity & bonus.
PSDT Chargeability & Tax Structure
PSDT applies to whole state of Punjab. Every person engaged in a profession, trade, or employment is liable for PSDT, except some exceptions as below:-
– Senior Citizens 1 (as per IT Act, 1961)
are exempt.
– Levied only on income tax payers
whose income exceeds the basic
exemption limit.
| Frequency of payment as per option | Due date to pay | Amount |
| Monthly deduction by employer | 30th of following month | Rs. 200 per month |
| Monthly payment by person | 30th of following month | Rs. 200 per month |
| Lump sum payment by both above | 30th April of the current financial year | Rs. 2,200 per year |
Registration & Compliance
Employer’s Role
Employers must deduct PSDT from employee salaries and deposit it with the government.
Exception: If an employee employed by more than one employer, who registers himself and furnishes declaration for self payment of tax, the employer is not liable.
Registration & Enrollment
- Register within 30 days of commencing
trade/profession/employment. - Officer issues certificate within 30 days, indicating tax payable and due date (deemed Notice of Demand).
- Existing registered employers need not re-register as a Person, they will be able to pay tax under single registration
Books of Accounts
Preserve for the period specified in the Income Tax Act.
Inspection & Search
Seizure of documents up to 60 days without prior approval.
Refunds
Provisions for refund of excess amounts paid.
Offences by Companies
Companies and their officers are liable for offences.
Assessment; Appeals & Revisions
Assessment Period
Within 3 years from the due date or actual filing date of return (whichever is later).
Special Assessment
Under Section 9(5), up to 6 years from the return furnishing date.
Failure to Pay or Deduct
Interest of 2% per month or part of month.
Tax Recovery
Recoverable as Land Revenue.
Appeals
No appeal after 60 days from
order date (condonable).
Minimum 50% of Tax, Interest,
Penalty must be paid before
filing.
Revisions
No application after 60 days from order date.
Power not exercisable after 3 years from order date.
Rectification
No rectification after 3 years from the date the order was passed.
Penalties for Non-Compliance (Before Amendment)
| Delay in Filing Return
For both employers and persons, Rs. 50/Day. |
False Information
If furnished while registration, Rs. 5,000. |
Failure to Pay Tax
50% Penalty on the tax amount. |
| Delay in Registration
For both employers and persons, Rs. 50/Day. |
Failure to maintain books
For both employers and persons, Rs. 50/Day. |
Failure to comply with any provision
For both employers and persons, Rs. 5,000 and Rs. 50/Day for continuing offence. |
Note: Penalties are subject to an opportunity of being heard.
Penalties for Non-Compliance (Amended)
Delay in Filing Return
For employers Rs. 1,000 per return/year and for persons Rs. 500per return/year.
Delay in Registration
For employers Rs. 2,000/year and persons Rs. 1,000/year.
False Information
For employer Rs.2,000/year and for persons Rs. 1,000/year, in addition to accrued tax, interest on account of such false information
Failure to maintain books
For employers Rs. 2,000/year and persons Rs. 1,000/year.
Failure to Pay Tax
50% Penalty on the tax amount.
Failure to comply with any provision
For employers Rs. 2,000 to Rs. 3,000 and for persons Rs. 1,000 to Rs. 2,000.
Note: Penalties are subject to an opportunity of being heard. Part of year will be deemed to be full year.
Liability in certain cases
Liability in case of Death
Legal heirs shall be liable. If business is not continued then liability to the extent of estate inherited.
Succession/Transfer
Both the transferor and transferee shall be liable upto the time of such transfer/succession
Dissolution of Firm
All the partners shall be jointly and severally be liable.
Amalgamation of Companies
The amalgamating company shall be liable till date specified in amalgamation order.
Partition of HUF
Every member shall be jointly and severally be liable
Liquidation of Companies
Liquidator to notify appointment within 30 days. Every officer of company shall be liable for any dues.
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