What is Professional Tax – Meaning, rates & compliance

Last Updated at: May 28, 2020
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What is Professional tax_
Registration of new private limited companies under EPFO, GST, ESIC and Professional Tax can now be done on the MCA portal, along with company incorporation itself. However, the companies will need to comply with the provisions of ESI Act, EPF Act and MP Act.

 

Many salaried employees in India wonder what a professional tax is and why it appears in their Form 16 or payslips as a deduction from income. In this article, we are giving a true picture of Professional tax, why it is deducted, the professional tax rates, and the professional tax compliance.

What is the professional tax?

Unlike stated by the term, professional tax is not a tax levied merely on professionals. This tax is levied on any individual who earns a livelihood through profession, employment, trade or calling. As per provisions mentioned in Clause (2), Article 276 of the Indian Constitution, the right to levy and collect professional tax is bestowed on the State Governments. Many Indian states have opted not to exercise this right as well. In all the other States where it is applicable, this tax is charged based on professional tax slab rates as enacted by the respective States. However, no state can levy professional tax beyond ₹ 2,500 on any taxpayer. Professional tax payment is allowed as a deduction from taxable income as per the Income-tax Act, 1961.

For salaried employees, professional tax is deducted by the employer and paid to the concerned department of the State Government. The self-employed individuals need to get a ‘Certificate of Enrolment’ from the concerned State authority to pay the professional tax.

Professional Tax rates

The professional tax rates and slabs vary from one state to another. For illustration, let us have a look at the professional tax slabs in two states, Tami Nadu and Kerala.

Get Professional Tax Registration

Professional Tax Slab in Tamil Nadu

Half-yearly* salary (Rs)

Tax per 6 months (Rs)

Up to ₹ 21,000/- NIL
From ₹ 21,001 to ₹ 30,000/- ₹ 100/-
From ₹ 30,001 to ₹ 45,000/- ₹ 235/-
From ₹ 45,001 to ₹ 60,000/- ₹ 510/-
From ₹ 60,001 to ₹ 75,000/- ₹ 760/-
Above ₹ 75,000/- ₹ 1095/-

 

*”half-year” shall be from the 1st  of April to the 30th  of  September and from the 1st  of October to 31st  of  March in a calendar year

Professional Tax Slab in Kerala

Monthly salary (Rs)

Tax per month (Rs)

Less than ₹ 2000/- NIL
From ₹ 2,000/- to ₹ 2,999/- ₹ 20/-
From ₹ 3,000/- to ₹ 4,999/- ₹ 30/-
From ₹ 5,000/- to ₹ 7,499/- ₹ 50/-
From ₹ 7,500/- to ₹ 9,999/- ₹ 75/-
From ₹ 10,000/- to ₹ 12,499/- ₹ 100/-
From ₹ 12,500/- to ₹ 16,666/- ₹ 125/-
From ₹ 16,667/- to ₹ 20,833/- ₹ 166/-
Above ₹ 20,834/- ₹ 208/- (₹ 212/- for February)

 

PROCEDURE FOR REGISTRATION AND PAYMENT OF PROFESSIONAL TAX

In Tamil Nadu, professional tax can be paid both online and offline, within 15 days from the start of the half-yearly period mentioned above. Here, we will have a look at the procedure for registration and professional tax online payment for the Greater Chennai Municipal Corporation –

  1. You can apply for registration of professional tax by visiting the online portal www.chennaicorporation.gov.in
  2. After providing the details such as your email Id, mobile number, etc., you will get your username and password that is secured with your mobile number and email.
  3. Log in to your account to fill up the self-assessment application
  4. You will need to upload the following documents along with the application:
  5. Certificate from the Registrar of Companies
  6. Memorandum of Articles (In case of Limited Company)
  7. Proof of Office establishment at Chennai (Mandatory)
  8. Certificate from the Commercial Tax Department
  9. Bank A/c. Details /PAN Card details
  10. Employee and employer details (Mandatory)
  11. You are not required to pay any fee while submitting this application.
  12. After uploading the documents click ‘submit’
  13. The portal will generate an acknowledgement slip along with the profession tax Registration Number (PTNAN-Professional Tax New Account number).
  14. After that, you can pay the professional tax online by using your preferred mode of payment.

 Professional Tax Compliance

Different states have different legislation in place to ensure compliance with professional tax. Therefore, the penal interest or amount of penalty for non-compliance may vary from one state to another. Usually, a penalty is imposed on a taxpayer for failing to register for professional tax. Penal provisions are also there for non-payment of professional tax and for failing to file the return within the due date.

 

 

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What is Professional Tax – Meaning, rates & compliance

933
Registration of new private limited companies under EPFO, GST, ESIC and Professional Tax can now be done on the MCA portal, along with company incorporation itself. However, the companies will need to comply with the provisions of ESI Act, EPF Act and MP Act.

 

Many salaried employees in India wonder what a professional tax is and why it appears in their Form 16 or payslips as a deduction from income. In this article, we are giving a true picture of Professional tax, why it is deducted, the professional tax rates, and the professional tax compliance.

What is the professional tax?

Unlike stated by the term, professional tax is not a tax levied merely on professionals. This tax is levied on any individual who earns a livelihood through profession, employment, trade or calling. As per provisions mentioned in Clause (2), Article 276 of the Indian Constitution, the right to levy and collect professional tax is bestowed on the State Governments. Many Indian states have opted not to exercise this right as well. In all the other States where it is applicable, this tax is charged based on professional tax slab rates as enacted by the respective States. However, no state can levy professional tax beyond ₹ 2,500 on any taxpayer. Professional tax payment is allowed as a deduction from taxable income as per the Income-tax Act, 1961.

For salaried employees, professional tax is deducted by the employer and paid to the concerned department of the State Government. The self-employed individuals need to get a ‘Certificate of Enrolment’ from the concerned State authority to pay the professional tax.

Professional Tax rates

The professional tax rates and slabs vary from one state to another. For illustration, let us have a look at the professional tax slabs in two states, Tami Nadu and Kerala.

Get Professional Tax Registration

Professional Tax Slab in Tamil Nadu

Half-yearly* salary (Rs)

Tax per 6 months (Rs)

Up to ₹ 21,000/- NIL
From ₹ 21,001 to ₹ 30,000/- ₹ 100/-
From ₹ 30,001 to ₹ 45,000/- ₹ 235/-
From ₹ 45,001 to ₹ 60,000/- ₹ 510/-
From ₹ 60,001 to ₹ 75,000/- ₹ 760/-
Above ₹ 75,000/- ₹ 1095/-

 

*”half-year” shall be from the 1st  of April to the 30th  of  September and from the 1st  of October to 31st  of  March in a calendar year

Professional Tax Slab in Kerala

Monthly salary (Rs)

Tax per month (Rs)

Less than ₹ 2000/- NIL
From ₹ 2,000/- to ₹ 2,999/- ₹ 20/-
From ₹ 3,000/- to ₹ 4,999/- ₹ 30/-
From ₹ 5,000/- to ₹ 7,499/- ₹ 50/-
From ₹ 7,500/- to ₹ 9,999/- ₹ 75/-
From ₹ 10,000/- to ₹ 12,499/- ₹ 100/-
From ₹ 12,500/- to ₹ 16,666/- ₹ 125/-
From ₹ 16,667/- to ₹ 20,833/- ₹ 166/-
Above ₹ 20,834/- ₹ 208/- (₹ 212/- for February)

 

PROCEDURE FOR REGISTRATION AND PAYMENT OF PROFESSIONAL TAX

In Tamil Nadu, professional tax can be paid both online and offline, within 15 days from the start of the half-yearly period mentioned above. Here, we will have a look at the procedure for registration and professional tax online payment for the Greater Chennai Municipal Corporation –

  1. You can apply for registration of professional tax by visiting the online portal www.chennaicorporation.gov.in
  2. After providing the details such as your email Id, mobile number, etc., you will get your username and password that is secured with your mobile number and email.
  3. Log in to your account to fill up the self-assessment application
  4. You will need to upload the following documents along with the application:
  5. Certificate from the Registrar of Companies
  6. Memorandum of Articles (In case of Limited Company)
  7. Proof of Office establishment at Chennai (Mandatory)
  8. Certificate from the Commercial Tax Department
  9. Bank A/c. Details /PAN Card details
  10. Employee and employer details (Mandatory)
  11. You are not required to pay any fee while submitting this application.
  12. After uploading the documents click ‘submit’
  13. The portal will generate an acknowledgement slip along with the profession tax Registration Number (PTNAN-Professional Tax New Account number).
  14. After that, you can pay the professional tax online by using your preferred mode of payment.

 Professional Tax Compliance

Different states have different legislation in place to ensure compliance with professional tax. Therefore, the penal interest or amount of penalty for non-compliance may vary from one state to another. Usually, a penalty is imposed on a taxpayer for failing to register for professional tax. Penal provisions are also there for non-payment of professional tax and for failing to file the return within the due date.

 

 

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