Professional tax is a tax that the state government levies on every person who earns a living. The documents required to register for Professional Tax, are discussed here.
Professional tax is akin to income tax but is administered by the State government. Despite its name, it is not solely imposed on professionals. In fact, this State-level tax is applicable to income earned through trade, profession, calling, or employment. Therefore, all salaried working professionals, including lawyers, doctors, and chartered accountants, are subject to professional tax.
This article will address the documentation required for Professional Tax registration. Whether you are an employed individual or a company responsible for paying professional tax for your employees, this guide is designed to assist you in understanding the registration process.
Let’s begin by exploring some fundamental aspects of professional tax.
What is Professional Tax?
Professional tax, in straightforward terms, is a mandatory payment for individuals engaged in employment with a regular income. Imposed by the state government, this tax is applicable to every individual earning a livelihood through various means. It encompasses a wide range of occupations, trades, and employment, with the tax amount determined by the earnings or revenue generated from these professional activities.
| Professional tax is levied on workers, employees, individuals with business, including freelancers, and others, based on their income exceeding any specified financial threshold, if applicable, as per income tax regulations. |
Who Is Responsible for Paying Professional Taxes?
The responsibility for professional tax payment lies with employers, who are tasked with calculating, collecting, and remitting the tax to the relevant State Government on behalf of their employees. It is imperative for employers to adhere to the legal stipulations of the respective State, including any financial thresholds that may be in place.
Individuals involved in trades or professions, such as employers, corporations, partnership businesses, limited companies, etc., also bear the obligation of paying professional tax corresponding to their trade or profession. This payment must align with any specified financial limits as outlined in the regulations of the pertinent State.
Who Is Exempted From Paying Professional Tax?
(i) A foreign employee is exempt from paying the Professional Tax.
(ii) Any person who is above the age of 65 years.
(iii) Any temporary worker who is working in the textile industry.
(iv) Parents or guardians of any child or children with disability (permanent one or mental)
(v) Any woman who is working, as an agent, exclusively, under the Indian government’s Mahila Pradhan Kshetriya Bachat Yojana
(vi) Any person suffering from a permanent physical disability, including blindness.
(vii) 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.
Is It Mandatory to Register for Professional Tax?
Yes, all professional, Designated Partners of LLP, Directors of the Company or any other employer is obligated to register for Professional Tax. This is to guarantee that professional tax is taken out of employees’ salaries and deposited at the proper office authorised by the state government.
In addition to registeration, filing a professional tax return that outlines the details of the tax payments is a mandatory requirement. Employers are obligated to deduct and remit taxes on behalf of their employees. To fulfill this obligation, the employer must secure a certificate of registration from the professional tax department within 30 days from the date when the liability is incurred.
What are the documents required for Professional Tax?
Here is a compilation of the documents required for Professional Tax registration for Companies/LLP/Partnership:
(i) Bank Account Details
– Cancelled Cheque
– Proof of Company’s Bank Account
– Bank Statement or Passbook Details
(ii) PAN Card
– Attested PAN Card of the Company by the Director
– PAN Card authentication by Designated Partner of LLP or any partner of the Partnership firm
(iii) Lists
– List of all Directors or List of all Partners
– List of other employees in the company, LLP, or Partnership firm
(iv) Certificate of Incorporation
– Incorporation Certificate of the Company, including MOA (Memorandum of Association) and AOA (Articles of Association)
– LLP Agreement or Certificate
– Certificate of Partnership firm Registration or Partnership Deed
(v) Identity Proof
– Passport-size photos of all Directors or Partners
– Aadhaar cards or any other identification proof for each director or partner
(vi) Registers
– Attendance Register of employees
– Salary Register
(vii) Address Proof
– Address Proof of the company’s place of business, with ownership documentation if owned by the applicant
– Rent agreement and No Objection Certificate (NOC) from the property owner if applicable
(viii) Consent
– Board Resolution approving professional tax registration (for Companies)
– Consent of partners for the application to register for a professional tax certificate (for LLP/Partnership)
(ix) Authorisation Letter
– Authorisation letter signed by Partners or Directors for obtaining a user ID and password from the Professional Tax Department
(x) Other Personal Documents
– Personal documents of directors or partners, including identification proof (PAN card, passport, driving license, voter card, or Aadhaar card) and address proof (utility bills)
For Individuals, the necessary documents include:
(i) Self-attested PAN card
(ii) Cancelled Cheque, bank statement, and Bank Account details of the Proprietorship
(iii) Passport-sized photos of the Proprietor
(iv) Address Proof of Proprietorship
(v) Identification and Address proof of the Proprietor
(vi) Attendance Register and Salary Register
(vii) Authorisation Letter for
Conclusion
In conclusion, meeting the documentation requirements for Professional Tax registration can be a challenging and time-consuming task.
Fortunately, our team at Vakilsearch is here to offer assistance. With extensive expertise across various sectors, our professional legal team can alleviate the burden of gathering the necessary paperwork and ensure compliance with the requirements.
For a stress-free process, reach out to Vakilsearch today!
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