Professional tax
Many people must have come across the word professional tax,
especially the salaried employees, must have come across it in their salary
slips or in the income tax return Form 16. Only a few are aware exactly is
professional tax all about. Therefore first let us understand what professional
tax stands for.
Professional tax is a form of tax levied on all kinds of
professions, traders and other types of employment. Professional tax is levied
on all types of professionals, traders, businessmen, merchants, working
individuals, freelancers and it is based on the income of the person from that
profession, trade, business, etc. In India professional tax is levied by the
state government (although not all state governments). The states which
impose professional tax are Punjab, Karnataka, Bihar, West Bengal, Andhra
Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerela, Meghalaya,
Odisha, Tripura, Madhya Pradesh, Jharkhand, and Sikkim. The State Governments
have the entitlement to make laws related to professional tax under Article 276
of the Constitution of India which deals with tax in regard to professions,
trades, and employment. Professional tax is deducted from taxable income, as
per the Income-tax Act, 1961. It is mandatory to pay professional tax and The taxpayer is entitled to an income tax deduction for this payment.
How is the professional tax rate set?
As the State Governments have the entitlement to levy
professional tax, the professional tax rates may differ from state to state.
They also have different laws and regulations to govern the professional tax
mechanism. Still, they follow a slab system based on the income to fix
professional tax rates. According to Article 276 of the constitution states can
not levi more than Rs 2500 as professional tax in any condition.
Where does one deposit professional tax?
The commercial tax department of the states are responsible
for collecting professional tax, which is then transferred into the funds of
the Municipal Corporation. An employer who employees more than 15 employees
under him, has to deposit the professional tax 15 days before a month ends and
an employee who has less than 20 employees under him needs to deposited
professional tax within 1-15th of the next month.
Who pays professional tax?
In the case of employees, the employer deducts the professional tax of
the employees and pays professional tax to the state government. Again corporate, partnership firms, sole proprietorship firms,
traders, etc, what can be termed as the employer also have to pay professional
tax for the income they gain from their company, trade or business. The rat and
amount depend on the monitory threshold defined by respective state
governments.
It
is very essential that the employer obtains a professional tax registration certificate,
if he fails to do so then he is not eligible to either pay professional tax on
his behalf or deduct professional tax from his employees.
Secondly different professional tax registration certificate would be required
the employers/traders offices in different states; as the rules and regulations
in regard to professional tax across states differ. Freelance professionals and
businessmen also need to get themselves registered for professional tax
certificate.
How
to pay professional tax?
Professional tax can be paid through either online or offline methods. Online procedure is
less time consuming, less cumbersome and involves less paperwork, as compared
to the offline manual filing of professional tax. As the tax is state specific, the
interval at which professional tax needs to filed differs.
Professional tax online payment is easy. One has to login to
the state website for professional tax and fill in all details and calculations
accordingly. If you find professional tax payment difficult through the online
method, then the VAKIL SEARCH website is your destination. The website guides
and assists people in paying their professional tax in a hassle-free manner. All
you need to do is browse on the VAKIL SEARCH website and ask for assistance and
your work will be done in the best possible professional way.
Consequences
of non-filing of professional tax
The
actual penalty amount and legal action that would be taken for non-payment of
professional tax differs from state to state. It is a punishable offense of a
professional, trader, businessman or freelance professional does not register
himself with the state government for depositing professional tax. One n also
face legal action if the professional tax is not paid within the deadline
provided by respective state governments.
