India, Bengaluru

Professional Tax

Professional Tax

Profession Tax is levied by the state government which is applicable to salaried employees and professionals such as chartered accountants, lawyers, and doctors.

As per Article 246 of Constitution of India, only Parliament has the exclusive power to make laws with respect to Union List which includes taxes on income. State has the power to make laws only with respect to Concurrent list and State list. However, Professional tax though is a kind of tax on income is levied by State Government

What is Professional Tax Registration?

Professional Tax registration is mandatory for the business within 30 days of employing staff and for professionals within 30 days of start practicing. The professional tax has to be deducted from the salary/wages paid. However, the amount of professional tax varies from state to state which is capped at Rs. 2500 per annum. If you have employees in more than one state then in each state professional tax registration is required to be obtained.

Rate of Professional Tax

Professional tax being levied by State Government, is different in different states. Every state has its own laws and regulation to govern professional tax of that particular state.

Responsibility of collection and payment of Professional Tax

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 the person responsible to deduct and pay professional tax to the State Government.

In case of trade or profession, the owner is for payment of professional tax for the firm.

Procedure to pay Professional Tax

Every state has specified their own procedure towards payment and compliances thereof.

Consequence of violation or non-compliances

Every state has a laid down penalty procedure for non-compliance of professional tax legislation.

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