What Is Professional Tax? Check Rates, Due Date & Exemption

Who are the Professional Taxpayers?

The following are the individuals who are liable to pay Professional Tax:

1. Salary or wage holders
2. Members of HUFs (Hindu Undivided Families)

1. Earning individuals residing within boundaries and 
2. An association of a body or person, public or private limited company, any cooperative society, and others

Who Collects Professional Tax?

Professional tax is collected by the employers from the monthly salaries and the Commercial Tax Department is responsible for collecting this tax.

It is then paid by them to the government failing which they can have penalties imposed on them for not collecting or failing to pay the professional tax. If you are not working for anyone then you are liable to pay the professional tax yourself.

1. For professionals not working with an employer they can register for it by applying through a form.
2. Once the form is received, a registration number will be issued to the individual.
3. Payment of the professional tax can be made under these registration numbers at banks.
4. It is also worth noting that, in some states, the government also provides rebates on the taxes if it is paid in a lump sum for a few years together so it is worth enquiring about the rules of professional tax in your state.

The following are the two specific certificates that employers need to register for to pay and charge taxes:

1. Professional tax enrolment certificate: For clearing the liabilities with the state government, the professional tax enrolment certificate authorises the employer to deduct professional tax from the employees’ salaries.
2. Professional tax registration certificate: The professional tax registration certificate certifies the employer to pay professional tax on their trade or business.

What is the Professional Income Tax Limit?

In 1949, the professional tax was introduced, and the limit of tax was set Rs.250. The limit was increased by Rs.2,500 in 1988 and the professional tax amount cannot exceed Rs.2,500. The tax amount depends on the state of employment and the income slab of the employee.

Professional Tax Applicability

Professional Tax is applicable for the below-mentioned individuals and entities:

1. Companies
2. Firms
3. LLPs
4. Corporation
5. Societies
6. HUF
7. Associations
8. Clubs
9. Legal practitioners such as solicitors
10. Contractors
11. Architects
12. Engineers
13. Insurance agents
14. Chartered Accountants
15. CS
16. Surveyors
17. Tax consultants
18. Management consultants
19. Medical representatives such as doctors, medical consultants, and dentists.

Professional Tax Rate

Professional Tax in Maharashtra

Professional tax rate slabs in Maharashtra are as follows:

Professional Tax in Karnataka

Professional tax rate slabs in Karnataka are as follows:

Professional Tax in West Bengal

Professional tax rate slabs in West Bengal are as follows:

Professional Tax in Madhya Pradesh

Professional tax rate slabs in Madhya Pradesh are as follows:

Professional Tax in Tamil Nadu

Professional tax rate slabs in Tamil Nadu are as follows:

Professional Tax in Andhra Pradesh

Professional tax rate slabs in Andhra Pradesh are as follows:

Professional Tax in Gujarat

Professional tax rate slabs in Gujarat are as follows:

Professional Tax in Odisha

Professional tax rate slabs in Odisha are as follows:

Professional tax rate slabs in Telangana

Professional tax rate slabs in Telangana are as follows:

Why is Professional Tax different for Different States?

Since it is a tax that is levied by the state government, it tends to differ from one state to another.

1. Each state has a slab that it declares and the professional tax is deducted based on these slabs. Some states and union territories do not charge professional tax too.
2. How it is paid is by dividing the annual professional tax due into 12 equal installments that are paid every month, except the one paid in February which is higher than the other months.
3. There may also be situations where sources of income falling under different sectors will also be liable for a separate tax.

For example, in some states, a person running a business in the transport sector may be required to pay a professional tax of about Rs.50 per annum for each of the vehicles owned and it may be subject to a cap of Rs.1,000 per annum.

The following is the list of states and Union Territories where Professional Tax is applicable and where it is not applicable: 

The list of states where Professional Tax is Applicable:

1. Jharkhand

1. West Bengal
2. Odisha
3. Bihar
4. Madhya Pradesh
5. Assam

1. Tripura
2. Nagaland
3. Meghalaya
4. Sikkim
5. Manipur

1. Mizoram
2. Andhra Pradesh
3. Chhattisgarh
4. Tamil Nadu
5. Kerala

1. Maharashtra
2. Telangana
3. Karnataka

The list of states where Professional Tax is Not Applicable:

1. Himachal Pradesh

1. Uttar Pradesh
2. Arunachal Pradesh
3. Chandigarh
4. Jammu & Kashmir
5. Uttarakhand

1. Delhi
2. Haryana
3. Punjab
4. Rajasthan
5. Goa

1. Daman & Diu
2. Dadra & Nagar Haveli
3. Andaman & Nicobar Islands
4. Lakshadweep

Exemption in Professional Tax

The below-mentioned individuals need not pay Professional Tax:

1. Individuals who run educational institutions that teach classes up to twelfth standard.
2. Individuals in the Central Para Military Force (CPMF).
3. An individual who has one child and has undergone a sterilization operation. However, the relevant documents must be submitted.
4. Any ex-serviceman who comes under SI No.1 (Schedule)
5. Any handicapped individual who has at least a 40% disability. However, the relevant certificate must be submitted.
6. Individuals who have a permit for a single three-wheeler or a single taxi to carry goods.
7. Deaf, dumb, and blind individuals who are earning a salary.
8. Civilian non-combatant and combatant members who are part of the Armed Forces. However, the Army Act must govern the Armed Forces.
9. Foreign technicians who have been employed by the state.
10. All philanthropic and charitable hospitals that are present in places that come under below taluk level.

How to fill in the Professional Tax Application form?

The following are the steps to fill the professional tax application form:

1. Visit the official website of Professional Tax i.e. http://pt.kar.nic.in
2. Click on ‘Enrolment Application’ on the left-hand side of the page
3. Select ‘New’, if you are paying professional tax for the first time
4. Select ‘Enrolled’, if you have filed tax returns earlier

Enter the required details, such as:

1. Financial year
2. Professional tax office
3. Type of return
4. Business status

1. Class of person

1. Click on ‘Next’
2. Make the payment through credit card, debit card, or net banking
3. Download the receipt after making the payment

Consequences of Violation of Professional Tax Regulation

The following are the consequences of violating professional tax regulations:

1. Once professional tax legislation becomes applicable, not registering for professional tax may levies penalty and the amount depends on the respective state’s legislation.
2. Failing to make payment and file the return within the specified due date may also levies penalty.

Note:

1. Penalty for late registration of professional tax in Maharashtra Rs.5 per day.
2. Monthly interest rate for late payment is 1.25%

1. For non-payment or delay of professional tax, penalty of 10% on the tax amount will be levied
2. For late return submission, a penalty amount charged ranges between Rs.1,000 to Rs.2,000