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When you take a look at your payslips, you will notice a small deduction mentioned on it, along with the other components like HRA, conveyance and basic salary break ups. This deduction is very minimal and is termed as Professional tax. Generally, this type of tax varies from state to state and in certain places, you may realise that there is no deduction made under this heading.
Professional Tax is a tax levied by State Governments from the professionally occupied business entities or professionals. A person earning income from salary or professions such as Chartered Accountants, Company Secretaries, Lawyers, etc. is required to pay professional tax every year around of Rs. 2,500 to the state or local authority by way of Tax on the profession, trades, callings, and employments. For the purpose of this registration, the employers, professionals, traders, etc. come under the purview of registration.
This tax is deducted from the salary of the employer, which is later eligible for deduction from the computation of taxable income. The registration is obtained by the employers and business owners with the respective Municipal Corporation. Being it State based registration, the rate of tax and method of registration is different. The slab is usually based on the gross income of the professional. It happens to be deducted very month from his/her income by the employer. Further, there are two types of registrations being – PTEC and PTRC registrations.
ComplianceIndia can help you obtain certificate of Professional Tax Registration quickly and hassle-free.
Liability for Professional Tax Registration
The application for registration of Professional Tax must be submitted to the State Tax Department within 30 days of employing staff in a business. If there is more than one place of work, the application must be made separately to each authority considering the place of work coming under that authority’s jurisdiction.
If there’s a delay in Professional Tax, it can lead to a penalty of Rs. 5 per day. On non-payment or late payment, there will be a penalty of 10% of the Tax if there’s the late filing of returns, a penalty of Rs. Three hundred will be imposed.
Advantages of Professional Tax Registration
The Followings are exempted from paying Professional tax
– Individuals serving in the Central Para Military Force (CPMF)
– People who run educational Institutions teaching up to class 12
– Handicaps with at least 40% disability. A relevant Certificate must be submitted.
– Any person who has a permit for a single three-wheeler or a single taxi to carry goods.
– Individuals who are deaf, dumb, and blind are earning a salary.
– Civilians as well as non-civilian members from the armed forces.
– Technicians from foreign countries who are employed by the state
How we Work?
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Rs. 19,999/- only
– Professional Tax Registration
– GST Registration
– Company Annual Compliance
– ROC Annual Filing
– Expert advice from Experts/ Legal Professionals
Documents required for Professional Tax Registration
Comparison with other related Services
|Parameters||Professional Tax Registration||MSME Registration||GST Registration||Importer Exporter Code||Shop & Establishments Registration|
|Applicable to||Applicability defers based on State Act||All Micro, Small and Medium Enterprises||Businesses exceeding a prescribed threshold for turnover||All importers and exporters||Applicability defers based on State Act|
|Regulatory body||State Government||Central Government||State and Central Government||Central Government||Municipal Corporation|
|GET STARTED||KNOW MORE||KNOW MORE||KNOW MORE||KNOW MORE|
Frequently Asked Questions
1. Is it mandatory to pay professional tax?
Yes, if you are a salaried individual, it is mandatory to pay professional tax.
2. How is Professional Tax calculated?
In India, Professional Tax is calculated on Salary slabs. Under minimum salary, there is no tax. The maximum amount paid as Professional Tax is Rs.2500 per year. The tax slabs differ from state to state.
3. Why does Professional tax differ from one state to another?
Since professional tax is a tax levied by the state government, it usually differs from one state to another. Each state has its own slab that it declares and the professional tax is deducted based on these slabs.
4. How much Professional Tax is deducted from Salary?
Professional Tax is deductible from income prior to calculation of Income Tax, and hence, appears at the top of the salary slip. It is deducted from the salary of the employee and deposited to the State Government by the employer.
5. Is Professional tax applicable in Union territories?
As Union Territories are small regions of the country, they tend to generate lower revenue than states. Hence, professional tax is not applicable for employees working in a Union Territory.
6. What is the maximum amount of professional tax levied by a state?
The maximum amount of professional tax levied by a state is Rs. 2,500 which is allowed as a deduction from your salary.
7. Are there any exemptions from professional tax?
There are some categories who are exempted from paying professional tax. These exemptions vary from State to State.
8. Who should register for Professional tax?
In the case of salaried employees who are liable to pay professional tax, the duty lies on the employer to get registered and deduct the professional tax from his employee’s salary and deposit the same into the State Governments account.
In the case of a self-employed individual who is covered under professional tax, it is his or her responsibility to get registered and pay professional tax in a correct and timely manner.
9. What are the categories of persons liable for Profession Tax?
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.
10. What is the time limit for obtaining Registration Certificate as an employer?
An employer, who wishes to obtain Registration Certificate, has to apply for the same within thirty days of his becoming liable to pay tax.
11. What is the penalty for furnishing wrong information’s?
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.
12. Is there any facility of making lump sum payment of Profession Tax?
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.
13. What are the advantages of making lump sum payment of tax?
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.
14. Who is assessed under Profession Tax Act?
An employer liable to pay Profession Tax is assessed under Profession Tax Act.
15. On what basis Profession Tax shall be calculated?
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.
16. Whether it is necessary to submit medical certificate for exemption from Profession Tax?
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.