Article discusses Who is liable to pay Punjab State Developmental tax, Exempt persons from Punjab State Developmental tax, Who will pay Punjab State Developmental tax, Registration under Punjab State Development Tax Act and Rules, 2018,  Payment of Tax under Punjab State Development Tax Act and Rules, 2018, Challan Generation and Deposit,  Filing of Returns under Punjab State Development Tax Act and Rules, 2018  and Assessment  under Punjab State Development Tax Act and Rules, 2018.

1. Who is liable to pay Punjab State Developmental tax?

Every employee or person doing business or profession in Punjab is liable to development tax if Taxable Income (Income after deduction of 80C etc) is above maximum exemption limit as per Income Tax Act i.e. Rs. 2,50,000/- at present. See below examples.

Income to be seen is of same year for which development tax is to be paid. i.e. to pay development tax of FY 2018-19, Income of same year i.e. FY 2018-19 is to be seen.

Section 4 also mention ‘Income tax payee’ which creates confusion as individual with Total Income above Rs. 3,00,000/- is income tax payee in Income Tax Act. Punjab State Govt should clarify the same. At present, we are assuming 2,50,000/- is cutoff amount to check applicability in below examples.

Date of Act: April 19, 2018

2. Exempt persons from Punjab State Developmental tax

1. Senior Citizens

2. Persons exclusively engaged in Agricultural activity

Every business operated in Punjab state is liable for the same. No exemption will be allowed just because Head office is in different state. Central Govt Offices, State Govt Offices, Defense, Railways all are also covered.

Examples:

Particulars Mr. A Mrs. B Ms. C Mr. D Mr. E Mr. F
Salary 4,00,000 1,00,000 2,90,000
House Property -75,000 4,00,000
Business/ Profession 3,00,000 45,000
Capital Gain 2,00,000 1,00,000
Other Source 15,000 2,000 75,000 2,50,000 5,00,000
Gross Total Income 3,40,000 3,02,000 3,75,000 2,95,000 2,90,000 10,00,000
Deductions 80C to 80U 50,000 60,000 60,000 15,000 50,000 50,000
Total Income 2,90,000 2,42,000 3,15,000 2,80,000 2,40,000 9,50,000
Tax Payable? Yes No Yes Yes No No
Reason Total  income above 2.50 Lakh Total  income below 2.50 Lakh TI above 2.50 Lakh even though Salary is less than 2.50 Lakh TI above 2.50 Lakh even though Business Income is less than 2.50 Lakh Total  income below 2.50 Lakh No Salary or Business Income

 3. Who will pay Punjab State Developmental tax? (Section 5)

1. In case of employee, employer will deduct tax from salary @ Rs. 200 per month and make payment to Govt.

2. In case of person engaged in business or profession, he shall be liable to register u/s 6 and pay taxes of Rs. 2400/- annually.

Act has been notified on 19th April, 2018, so tax amount of April, 2018 will be Rs. 80/- only (proportionate amount for 12 days)

Person includes Individual, Firm, company etc so all are required to pay tax as per Act but registration as tax payer is allowed by portal for individuals only.

Partners shall be liable to register themselves if applicable because they are not employees of firm.

Directors if withdrawing salary will not be required to register as company will deduct as employer.

If an employee is employed from more than one employer then he can choose one employer or register himself u/s 6 under this act and give declaration to other employers and designated officer in Form PSDT-5.

4. Registration under Punjab State Development Tax Act and Rules, 2018 (Section 6)

a. Who is required to register?

1. An Employer who is liable to pay salary to person(s) who are covered under Development Tax. Application is to be made in form PSDT-1 and registration will be granted in Form PSDT-3

2. Self-employed persons who are running any business and profession and they are liable for this tax. Application is to be made in form PSDT-2 and registration will be granted in Form PSDT-4

b. Who is not required to apply for register?

Employees are not liable to register because their employer is liable to register and deduct tax.

c. When to take registration?

Within 60 days from date of Act however Portal for registration is live in the month of October only. So registration should be taken now. Persons who become liable in future due to start of new business or profession or increase in income will have to take registration within 30 days from which they are liable.

Penalty for failure to register can be imposed at Rs. 50/- per day

d. Documents required for registration?

1. PAN

2. GSTIN

3. ADDRESS

4. Any addition address within Punjab

5. Email and Mobile No.

6. Authorized responsible person name, father name and designation

7. Total No of all Employees in Punjab (Average of last year can be given)

Manual for registration in case of Individual Tax payers  click here

Manual for registration in case of Employers  click here

Registered person shall display certificate at his place of work.

5. Payment of Tax under Punjab State Development Tax Act and Rules, 2018 (Section 10)

Employees’ tax can be deducted and paid monthly or quarterly. If the number of employee is different in each month, then monthly deposit is advised.

Due Date of Deposit by employer is not prescribed yet in Act/ Rules. Deposit can be done in a reasonable period at present.

Tax by others will be paid once in a year within 30 days from date of registration.

Late deduction, Late Payment will attract simple interest @2% for every month or part of month.

6. Challan Generation and Deposit

Login on psdt.punjab.gov.in

–> Go to Generate challan, Select month and enter No. of employees and submit.

–> Print 4 copies of challan generated in Form PSDT-8

–> At present online deposit not available.

–> Make Cheque in favor of Govt. Dues. Cash also allowed.

–> Deposit in Bank

–> Use Code 0028-00-107-01-00 for State Bank of India

–> After some days, bank will update and in Challan history, status will be show as paid.

–> After generation, you can also cancel the challan if required.

7. Filing of Returns under Punjab State Development Tax Act and Rules, 2018 (Professional Tax) (Section 7)

Return will be filed annually in Form PSDT-6 for employers on or before the 13th April of next year.

Tax payers shall also file annual return in Form PSDT-7. Due date not prescribed yet.

Return shall be accompanied with all challans.

Employees whose tax is deducted by employer need not to file any return.

Penalty for failure to file returns can be imposed at Rs. 50/- per day

8. Assessment  under Punjab State Development Tax Act and Rules, 2018 (Section 8, 9)

Filed returns will be accepted by designated officer else notice will be issued for assessment. Assessment can be done within 3 years (6 years in case of special circumstances as prescribed) from date of filing of return or due date whichever is later. Any additional demand shall have to be paid within 15 days.

Article by CA Shashi Bhushan, Jalandhar

Email: [email protected] , Phone: 98887-06464

Author Bio

Qualification: CA in Practice
Company: UGS & Co.
Location: Jalandhar, Punjab, IN
Member Since: 03 May 2018 | Total Posts: 2
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16 Comments

  1. SANJEEV says:

    sir,
    we stand in books PBDT FY 2018-19 rs.2200,
    now we want to FY 2019-20 PBDT. by cash paid to employee return back rs. 2200. can we write off pbdt by cash

  2. mohit vashisht says:

    As per section 4 sub clause 3, PSDT act says ” the tax, for
    any particular financial year, shall be payable under this Act only by those
    persons whose taxable income for the same financial year, before allowing
    deduction on account of tax levied under this Act, exceeds the maximum
    amount which is not chargeable to Income Tax by the amount of tax payable
    by him under this Act for that year”
    in this case, I think deductions u/s 80C to 80U are not to be taken into account for PSDT purpose.
    Kindly comment.

  3. inder says:

    i would like to ask as government increase tax limit to 5 lakh , still have to professional tax, who have a income of 250000 or more??

  4. Hitender says:

    Sir, What will be scenario in case of sales persons salary where incentives are paid and varies month to month. For eg. fixed salary 2,50,000 p.a but as incentives varies and he fall in tax limit in Dec18 or Jan19, PSDT to calculate from Apr18 onwards? Also employees actual tax liability is calculate in Jan19 after actual tax documents submission for 80C benefits.

  5. Lakhvir Singh says:

    Punjab Govt levied Development Tax to the tune of Rs 200/- pm under provisions contained in article 276 of the constitution of India w.e.f. April,2018. Although they have named it Punjab Govt Development Tax yet it appears to be a professional tax as every professional or traders has to pay it.

    My question is – whether the total paid amount (Rs 2400 per annum as Development Tax ) is exemptable from the Taxable Amount under the IT act 1961 or Not ?

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