Introduction
Professional tax is a direct tax that is deducted from your gross salary by your employer. Because it is imposed by the state government, the tax you pay will differ according on the state you reside in. There is a maximum amount of Rs. 2500 that you might be charged.
The slabs are used to compute the tax. The salary slab rates used to calculate professional taxes may vary by state. Gujarat, Maharashtra, and Andhra Pradesh are a few of the states that apply this tax.
Type of Professional Tax
There are two types of Professional tax
- PTEC (Professional Tax Enrolment Certificate)
- PTRC (Professional Tax Registration Certificate)
What is PTEC & PTRC
PTEC stand for Professional Tax Enrolment Certificate. PTEC permits the payment of professional taxes to both the professional or business owner and the business entity. Put differently, PTEC permits the business to pay professional taxes for both the firm and its directors also in case of individual like professionals and sole proprietor all must register under PTEC.
PTRC stand for Professional Tax Registration Certificate. Under the PTRC, employers are able to take professional tax out of their employee salaries and deposit it with the government. A regular firm requires PTEC and PTRC to pay professional taxes on their own and, as well as the professional tax for all its employees as is applicable. But, in case the Company and LLP does not have any employee then it will only require to pay PTEC and not PTRC and pay for Directors and Partners.
Who are the Professional Taxpayers?
The following are the individuals who are liable to pay Professional Tax:
- Salary or wage holders
- Members of HUFs (Hindu Undivided Families)
- Earning individuals residing within boundaries and
- An association of a body or person, public or private limited company, any cooperative society, and others
Who is responsible for paying professional tax?
On behalf of their employees, employers are responsible for calculating, gathering, and remitting professional tax to the relevant State Government. They have to comply with all applicable State laws and regulations, including any financial ones.
A person who works as an employer, corporation, partnership, limited company, or in any other capacity as an engaged trader or profession is also required to pay professional tax on that trade or profession in accordance with any financial barriers that may be established by the legislation of the relevant State.
What is the Professional Income Tax limit?
This tax is levied by the state government and thus can vary depending on the state you live in. The maximum limit of which you can be charged is Rs 2500.
Who is exempted from paying professional tax?
- Any foreign employee is exempt from paying the Professional Tax.
- Any person who is above the age of 65 years.
- Any temporary worker who is working in the textile industry.
- Parents or guardians of any child or children with disability (permanent one or mental)
- Any woman who is working, as an agent, exclusively, under the Indian government’s Mahila Pradhan Kshatriya Bachat Yojana
- Any person suffering from a permanent physical disability, including blindness.
- Any member of the forces as stated in the Air Force Act, 1950, the Navy Act, 1957, and the Army Act, 1950, which includes participants of reservists or auxiliary forces, serving in the respective State.
Who is applicable from paying professional tax?
Professional Tax is applicable for the below-mentioned individuals and entities:
- Companies
- Firms
- LLPs
- Corporation
- Societies
- HUF
- Associations
- Clubs
- Legal practitioners such as solicitors
- Contractors
- Architects
- Engineers
- Insurance agents
- Chartered Accountants
- CS
- Surveyors
- Tax consultants
- Management consultants
- Medical representatives such as doctors, medical consultants, and dentists.
State wise Professional Tax Slab
Professional slab rate varies from state to state. Some of the states which currently impose a professional tax in India are West Bengal, Maharashtra, Gujarat, Andhra Pradesh, Kerala, Tamil Nadu, Karnataka, Bihar, Assam, Madhya Pradesh etc.
- Professional Tax in Maharashtra
| Monthly Salary | Tax |
| Up to Rs 7,500 for Men | Nil |
| Up to Rs. 10,000 for women | Nil |
| Rs. 7,501 to Rs. 10,000 | Rs. 175 |
| Rs. 10,000 and above | Rs. 200 & Rs. 300 on Feb month |
Due Date for Professional Tax Payment in Maharashtra
Enrolment date determines the deadline for Maharashtra professional tax payments. Therefore, organisations that enlisted after May 31 of a given fiscal year must pay professional tax within one month of the enrolment date, and organisations that joined before May 31 of the same fiscal year must pay professional tax by June 30 of that same year.
If employers do not pay professional tax on time or put off paying it altogether, they will be penalised 2% interest each month.
- Professional Tax in Karnataka
| Monthly Salary | Tax |
| Up to Rs.14,999 | Nil |
| Rs.15,000 and above | Rs.200 |
Due Date for Professional Tax Payment in Karnataka
Each year, professional tax must be paid by all employers and businesses in Karnataka with enrolment certificates by the tax slab's deadline of 30 April, or they must pay a late payment penalty of 1.25% per month.
- Professional Tax in West Bengal
| Monthly Salary | Tax |
| Up to Rs.10,000 | Nil |
| Rs.10,001 to Rs.15,000 | Rs.110 |
| Rs.15,001 to Rs.25000 | Rs.130 |
| Rs.25,001 to Rs.40,000 | Rs.150 |
| More than Rs.40,000 | Rs.200 |
Due Date for Professional Tax Payment in Karnataka
Enrolled persons in West Bengal are required to pay professional tax online by July 31st of the fiscal year, if not before. Employers who are registered must, however, pay a monthly charge. If a professional tax return is not filed within 90 days of the eligibility date, or if professional tax payments are delayed, the West Bengal State Government will impose fines on individuals and companies.
In the event of a late payment, concerned individuals or businesses must pay interest at a monthly rate of 1% on the unpaid tax.
- Professional Tax in Madhya Pradesh
| Monthly Salary | Tax |
| Up to Rs. 18,750 | Nil |
| Rs.18,751 to Rs.25,000 | Rs.125 |
| Rs.25,001 to Rs.33,333 | Rs.167 |
| Rs.33,334 and above | Rs.208 for 11 months and Rs.212 for the last month |
Due Date for Professional Tax Payment in Karnataka
For individuals whose salaries or income surpass Rs. 15,000, the Madhya Pradesh government levies taxes of Rs. 208 during the first 11 months of the fiscal year and Rs. 212 during the last month of the fiscal year.
Those who do not work for a company, however, must pay professional tax once a year. Depending on when professional taxes are registered, the dates vary. If an individual registers before the fiscal year begins or before August 31st of that year, they are required to pay professional tax by September 30th of that year.
Professional tax must be paid on time by employers (on behalf of their employees) and independent contractors, or they risk a penalty equal to 2% of the total amount payable each month. Up to two-thirds (2/3) of the total amount of taxes payable may be penalised.
- Professional Tax in Tamil Nadu
| Monthly Salary | Tax |
| Up to Rs.3,500 | Nil |
| Rs.3,500 to Rs.5,000 | Rs.22.5 |
| Rs.5,001 to Rs. 7,500 | Rs.52.5 |
| Rs.7,501 to Rs. 10,000 | Rs.115 |
| Rs.10,001 to Rs.12,500 | Rs.171 |
| Above Rs.12,500 | Rs.208 |
Due Date for Professional Tax Payment in Tamil Nadu
Payments for professional taxes are required on April 1st and October 1st of each half-year. A two percent monthly penalty is imposed on employers and individuals who fail to pay professional tax by the deadline.
If professional tax is not paid, there will be an extra 10% penalty. If individuals or employers give fraudulent or erroneous information, they will be liable for a fine equal to three times the amount of taxes owed.
- Professional Tax in Andhra Pradesh
| Monthly Salary | Tax |
| Up to Rs.15,000 | Nil |
| Rs.15,001 to Rs.20,000 | Rs.150 |
| Above Rs. 20,000 | Rs.200 |
Due Date for Professional Tax Payment in Andhra Pradesh
In Andhra Pradesh, the professional tax deadlines are set by the certificate of enrolment. Professional tax payments must be made by June 30 of the fiscal year. Therefore, in this scenario, a person must pay the professional tax within a month of the day of enrolment if they receive their enrolment certificate on or before May 31.
In the state of Andhra Pradesh, failure to pay personal income tax (PT) on time results in a penalty that must equal precisely 25% to 50% of the unpaid tax, neither more nor less.
Why is Professional Tax different for different states?
Considering that it is a state-imposed tax, the specifics vary from one state to another.
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.
The yearly professional tax liability is paid in twelve equal instalments each month, except for February, when the instalment is larger than the others.
In certain cases, income from sources that fall within various sectors might potentially be subject to additional taxes.
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
- Andhra Pradesh
- Karnataka
- Maharashtra
- Tamil Nadu
- Assam
- Kerala
- Meghalaya
- Tripura
- Bihar
- Jharkhand
- Madhya Pradesh
- West Bengal
- Manipur
- Mizoram
- Odisha
- Puducherry
- Sikkim
- Telangana
- Nagaland
- Chhattisgarh
- Gujarat
The list of states where Professional Tax is not applicable
- Arunachal Pradesh
- Himachal Pradesh
- Delhi
- Haryana
- Uttar Pradesh
- Uttarakhand
- Andaman and Nicobar Islands
- Daman & Diu
- Dadra and Nagar Haveli
- Lakshadweep
- Jammu & Kashmir
- Punjab
- Rajasthan
- Chandigarh
- Goa
PTRC- Professional Tax Registration Certificate
Everyone should receive this certificate, including businesses with workers and HUF. To receive this certificate, there is no minimum employment strength required. Even if there is just one employee enrolled, this certificate needs to be obtained. All establishments with staff members, except for partnership firms, are required to get both enrolment and registration certificates. In the case of partnership firms, the registration certificate and the enrolment certificate for each partner should be obtained.
PTEC- Professional Tax Enrolment Certificate
Everyone should obtain this certificate, except for firms (regardless of whether they are registered under the Partnership Act 1932) and Hindu Undivided Families (HUFs) who are actively or passively involved in any profession, trade callings, or employment and who fall under any of the classes listed in schedule I of the act. These individuals will be required to pay tax to the State Government at the rates specified against the class of persons mentioned in the schedule. Over the course of the year, professional tax will be charged to the maximum of Rs. 2,500. Moreover, a director or partner who needs to obtain an enrolment certificate and pay Rs. 2,500 must do so just once, not for every corporation or firm where they are a director or partner.
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