Professional Tax is like Income tax but is collected by the State Government. But unlike its name suggests it is not just levied only on professionals. It is a tax on all kinds of professions, trades and employment and levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on business including freelancers, professionals etc. subject to income exceeding the monetary threshold if any.
State government empowered to make laws with respect to professional tax though being tax on income under Article 276 of the constitution of India which deals with tax on professions, trades, callings and employment. Professional tax is a deductible amount for the purpose of Income-tax Act, 1961 and can be deducted from taxable income.
Professional tax is collected by the Commercial Tax Department. The commercial tax department of the respective states collects it which ultimately reaches the fund of Municipality Corporation.
In case of employees, an employer is a person responsible to deduct and pay professional tax to the State Government subject to the monetary threshold if any provided by respective state’s legislation, employer (corporate, partnership firms, sole proprietorship etc) also being a person carrying on trade/profession is also required to pay professional tax on his/her trade/ profession again subject to the monetary threshold if any provided by respective State’s legislation.
There are two types Professional tax certificates:
Professional tax is applicable once the person begins his profession or business within 30 days of starting the profession. In case the company has its presence in different places, then it is required to take registration for each such place.
The professional tax registration procedure varies according to state : The tax slab rates can vary from one state to another, where the business owner have employees under different states , then one have to get a professional tax registration for all the states.
Frequency of filing returns: The frequency with which one needs to file returns will depend on the state the person resides in. before filing a return it’s important to know the rules of the state.
Get registered as a payee of professional tax in a local professtional tax office at that specified state.
It is imperative for all the individuals and businesses that are liable for the tax payment.
Calculate the pay of professional tax in the prescription form.
The payment and calculations done must be audited by the chartered Accountant.
When it comes to employees, the employer has to deduct the salaries of employees for the professional tax.
Once the person gets registered, he is then responsible to pay Professional Tax; different professions are specified with different PT rates.
All these documents are required to be self-attested.
An employer is responsible for deducting the professional tax from the salaries of his/her employees and deposit the collected amount in the appropriate government department, also to file a return to the department in a prescribed form with proof of tax payment within certain period of time.
Employer (Corporate, solo Proprietorship, Private Limited) is also liable to pay the tax on his trade or business.
And other class of individuals, the tax can be paid directly to the government or through the authorized local body.
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