What is Professional Tax - Meaning, Rates, and Compliance

                           

                     What is Professional Tax - Meaning, Rates, and Compliance

Many salaried employees would be very well aware of the term 'professional tax' as it would have been mentioned in the payslip/Form 16 issued to them. But all of them may or may not understand what it is and why it is showing in their payslip/Form 16 as a deduction from their salary income. Hence, this article is an attempt to provide a better picture of what is 'professional tax' and why it is deducted, and whether it is only the salaried class that is bearing it.

• What is business tax and who levies it?

The nomenclature 'professional tax' may be one of those words that do not fully convey the true meaning of the term. Contrary to the name, it is not just a tax levied on professionals. It is a tax on all types of professions, trades, and employment and is levied on the basis of income of such profession, trade, and employment. It is levied on a person carrying on the business including employees, freelancers, professionals, etc., subject to income exceeding the monetary limit if any.

According to Article 246 of the Constitution of India, only the Parliament has a special power to make laws with respect to the Union List which includes taxes on income. The state has the power to make laws only with respect to the concurrent and state lists.

However, professional tax is a type of tax on income levied by the state government (not all states in the country have opted to levy professional tax). The state government is also empowered to make laws with respect to professional tax notwithstanding the tax on income under Article 276 of the Constitution of India, which deals with tax on professions, professions, calling, and employment.

It may be noted that professional tax is a deductible amount for the purpose of the Income Tax Act, 1961 and can be deducted from taxable income.

• professional tax rate

The professional tax levied by the state government varies from state to state. Each state has its own laws and regulations governing that particular state's professional tax. However, all states follow a slab system based on income for levying the professional tax.

In addition, Article 276 of the Constitution which empowers the state government to levy professional tax has also provided for a maximum limit of Rs 2,500, beyond which no person can be taxed professionally.

The Jharkhand State Tax on Professions, Trades, Callings and Employment Act, 2011 (commonly known as Profession Tax Act) came into force with the object of levying tax on professions, trades, callings, and employments. It extends to the whole state of Jharkhand. 

Monthly Salary Range	PT/Month
Up to Rs.25,000	0
Rs.25,000 to Rs.41,666	Rs.100
Rs.41,667 to Rs.66,666	Rs.150
Rs.66,667 to Rs.83,333	Rs.175
Rs.83,334 and above	Rs.208

• Who is responsible for collecting and paying professional tax?

Professional tax is collected by the commercial tax department. It is collected by the commercial tax departments of the respective states which ultimately reaches the municipal treasury.

The person responsible for paying professional tax

•  In the case of employees, the employer is the person who is responsible for deducting and paying professional tax to the State Government, subject to the monetary limits provided by the law of the State concerned.

• An employer (corporate, partnership firm, sole proprietorship, etc.) also being a person carrying on business/profession is again required to pay professional tax on his/her business/profession subject to monetary limits provided by the law of the respective state.

• In such a case, the employer has to register and obtain a professional tax registration certificate to be able to pay professional tax on his business/profession and a professional tax enrollment certificate to be able to deduct and pay tax from his employees. need to. In addition, separate registration may be required for each office depending on the law of the respective state.

• Individuals who are doing freelancing business without any employees are also required to register themselves subject to the monetary limit provided by the law of the respective state.

• However, a professional tax levy is subject to exemptions provided by the respective state for certain categories. For example, a parent or guardian of any person who is suffering from mental retardation, blind persons are exempted from levying Karnataka occupational tax.

What is the procedure to pay professional tax? Is there any return to be filed?

This is again a state-specific question. However, in general, a professional tax can be paid either online/offline. In addition, depending on the requirement of the state, professional tax returns also need to be filed at specified intervals.

Consequences of violation of professional tax regulation

While the actual amount of penalty or penal interest may depend on the law of the respective state, fines may be imposed by all such states for not registering after the professional tax law has come into force.

Apart from this, there is also a provision of penalty for not making the payment within the due date and failure to file the return within the specified due date.

For example, JHARKHAND State attracts a penalty of Rs.5/day for the delay in registration, interest at the rate of 1.25% per month for delay in payment, 10% of the amount of tax in case of delay/non-payment fine is imposed. of professional tax, Rs 1000 - Rs 2000 fine for delay in filing return

In Hindi Article:- https://akbnews01.blogspot.com/2021/12/blog-post_95.html

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