Professional Tax Registration
Professional Tax Registration is Mandatory in some state and not Having Professional Tax Registration certificate may result of notice and heavy penalties and interest. So any Entity who is starting there own business or profession must should obtain Professional Tax Registration or Professional Tax Enrollment Certificate within 30 day from date of commencement of business. Lets apply for PTEC and PTRC.
Professional Tax Enrollment Certificate (PTEC)
Setupfiling Fee: ₹1499/-
Govt Fee: Max ₹2500/-
Professional Tax Registration and Compliance
Navigating the complexities of taxation in India can be challenging, but understanding the ins and outs of Professional Tax Registration in India is crucial for businesses and professionals. In this comprehensive guide, we will walk you through the entire process, its significance, and provide answers to common questions. By the end, you’ll have a clear understanding of Professional Tax Registration in India.
What is Professional Tax?
Professional tax is a direct tax levied by the state governments in India on the income of individuals from their professions, trades, callings, and employments. It is a tax levied on individuals who are employed by any person, individuals who are engaged in any profession, trade, calling, or employment on their own account, and businesses that employ any person in any profession, trade, calling, or employment.
The rates of professional tax vary from state to state. In most states, the professional tax is levied on a slab basis. This means that the rate of tax increases as the income increases. The maximum amount of professional tax that can be levied is Rs. 2,500 per annum.
Professional tax is deducted from the salary of employees by their employers. Employers are required to pay the professional tax collected from their employees to the state government on a quarterly basis. Individuals who are engaged in any profession, trade, calling, or employment on their own account are required to pay professional tax directly to the state government on a quarterly basis.
Professional tax is an important source of revenue for state governments. It is used to fund various public services, such as education, healthcare, and infrastructure development.
Who Should Register for Professional Tax?
Any individual earning an income from a profession, trade, or employment, including employers, employees, and self-employed professionals, must register for Professional Tax in their respective states.
Professional Tax Applicable States across India
Please refer to the following table to know more about the states which impose professional tax in India:
PT Applicable States
PT Not - Applicable States
Types of Professional Tax Registration Certificates
1. PTEC (Professional Tax Enrolment Certificate)
This type of professional tax is paid by the business entity, i.e. Private/ Public Limited Company, owner or a professional, i.e. Sole Proprietor or Director Etc. through this certificate
2. PTRC: (Professional Tax Registration Certificate)
Here, the Government or Non- Government employer deducts the tax from the employee’s salary and deposits the same to the government.
Benefits of Professional Tax Registration
The benefits of Professional tax Registration is given below:
- Imposes Minimal Restriction
It is simple to comply with the Professional Tax Compliance, which results in a smooth registration process with minimum restrictions.
- Helps in Avoiding Penalty
It is compulsory to pay Professional tax as per the law. Hence, the timely payment of Professional tax can help avoid penalties and any punitive action against the employer or a self-employed person.
- Enables Smooth Registration Process
Professional Tax Compliance is simple, which can enable a smooth and hassle-free Registration Process.
- Helps in the Implementation of Development and Welfare Programs
The Professional Tax acts as a revenue source for the state governments that helps the government to implement schemes for the various welfare and development of the region.
- Can Claim Deduction
The employer or the self-employed person can claim a deduction on the previously paid professional tax.
Professional Tax Compliance
Professional Tax Rate:
The maximum amount payable per annum towards professional tax is INR 2,500. The professional tax is usually a slab amount based on the gross income of the professional. It is deducted from his income every month.
The Commercial Taxes Department of a state/union territory is the nodal agency that collects professional tax on the basis of predetermined tax slabs which vary for each state and union territory. The tax is calculated on the annual taxable income of the individual; however, it can be paid either annually or monthly.
Who Pays Profession Tax?
In the case of Salaried and Wage-earners, the Professional Tax is liable to be deducted by the Employer from the Salary/Wages, and the Employer is liable to deposit the same with the state government.
Self-employed persons who carry out their profession or trade on their own and fall in the ambit of profession tax are liable to pay the tax themselves to the state government.
Employer’s Responsibility for Professional Tax
The owner of a business is responsible for deducting professional tax from the salaries of his employees and paying the amount so collected to the appropriate government department. He/she has to furnish a return to the tax department in the prescribed form within the specified time. The return should include proof of tax payment. In case of not enclosing the payment proof, the register will consider the return incomplete and invalid.
Exemptions for Payment of Professional Tax
There are exemptions provided for certain individuals to pay Professional Tax under the Professional Tax Rules. The following individuals are exempted to pay Professional Tax:
- Parents of children with permanent disability or mental disability
- Members of the forces as defined in the Army Act, 1950, the Air Force Act, 1950, and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the State.
- Badli workers in the textile industry
- An individual suffering from a permanent physical disability (including blindness)
- Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
Parents or guardians of individuals suffering from a mental disability.
- Individuals, above 60 years of age
Due Date to apply for Professional Tax Registration
Within 30 days of hiring workers in a business or, in the case of professionals, within 30 days of beginning the practice, professional tax registration is required.
- Within 30 days of hiring workers for his firm, the applicant must submit an application for the Registration Certificate to the state tax department that will assess his taxes.
- If the assessee has many places of employment, a separate application should be submitted to each body with regard to each location that falls under its authority.
Due Dates for Professional Tax Payment
The payment must be made within 15 days of the end of the month if the employer had more than 20 employees. The payment deadline is the 15th of the month after the end of the quarter if an employer has fewer than 20 employees.
Documents required for Professional Tax Registration
- Certificate of Incorporation / LLP Agreement
- MOA and AOA
- PAN Card of Company/LLP/Proprietor/Owner/Director
- NOC from the landlord, where the business is situated
- Passport size photos of Proprietor/Owner/Director
- Address and identity proof of Proprietor/Owner/Director
- Details of employees and salaries paid
- Additional registrations and licenses
The Process of Professional Tax Registration
Step 1: Filing the Application with Necessary Documents
The applicant must file the application form and the requisite documents.
Step 2: Submitting the Application to the Concerned state Government & Tax Department
The applicant must submit the application to the appropriate state government together with all required paperwork. The tax department should also receive a copy of this.
Step 3: Scrutinization by the Tax Authority
The tax authority must carefully review applications after receiving them to make sure all the information is accurate.
Step 4: Issue of Registration Certificate
The authorities will issue the Registration certificate once all the paperwork have been successfully reviewed.
Penalties Related To Professional Tax Registration
All of these jurisdictions may apply a fine for failure to register for professional tax when professional tax policy is applicable. However, state regulatory law will determine the exact amount of the Penalty.
The PT return must be submitted by the deadline or there will be fines for withholding payments after they are due. The real fine is set by each state’s professional tax laws. Businesses who don’t register for professional taxes, pay taxes after the deadline, or file returns on time risk fines, late fees, or even jail time.
Additional penalties apply if a payment is not made by the due date or a return is not filed by the due date. The following details, for instance, describe the fine amount levied by the Maharashtra government for late submission or failure to file.
Nature of default
Not obtaining PT registration
Rs.5/- per day
Late filing of PT return
Late payment of PT dues
Interest @1.25% p.m.
FAQs about Professional Tax Registration in India
Professional Tax is typically paid on a monthly or annual basis, depending on the state’s regulations.
Yes, many states offer online registration options for Professional Tax.
No, each state in India has its own Professional Tax regulations and rates.
Failure to register for Professional Tax can result in penalties and legal consequences.
Yes, you can cancel your registration by notifying the tax authorities.