Tips about Paying Professional Tax

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 1-15^th 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.