In India, professional tax is levied on trade and profession. This tax is charged by the state government and is payable by every employee employed by private entities. Keep reading to know more!
In Karnataka, Professional Tax stands as a significant financial obligation for individuals involved in diverse professions and trades. This state-mandated tax plays a vital role in the economic development of the region, underscoring the value of professional contributions. A thorough understanding of the intricacies of Karnataka Professional Tax is essential for professionals to ensure compliance with the state’s fiscal regulations.
This concise guide aims to illuminate key aspects of Karnataka Professional Tax, assisting individuals in comprehending and fulfilling their fiscal responsibilities in accordance with the state’s taxation framework.
Professional Tax in Karnataka: Key Pointers
- The state government of Karnataka imposes professional tax on individuals, including salaried workers.
- Those working in establishments such as factories are also required to undergo the registration process for professional tax in Karnataka.
- It is obligatory for both businesses employing workers and professionals to register for professional tax within 30 days from the commencement of their practice.
- The professional tax amount is eligible for deduction from the salaries paid to employees.
Regulation of Professional Tax in Karnataka
The regulation of Professional Tax in Karnataka is governed by the Karnataka Tax on Professions, Trades, Callings, and Employments Act of 1976. As per this legislation, individuals with a monthly income exceeding ₹15,000 are obligated to remit professional tax. However, this provision does not apply to professionals aged 65 or older who have been engaged in their respective professions for less than 120 days in the given year.
Tax Slab Rate of Karnataka Professional Tax
Regarding the tax slab rates for Karnataka Professional Tax, it’s important to note that the amount varies from state to state. In Karnataka, the maximum professional tax that can be charged is ₹2,500. Although the tax rate may undergo changes each year,
| Monthly Salary Range | Amount Payable per Month |
| Rs 1 to Rs 9,999 | 0 |
| Rs 10,000 – Rs 14,999 | 0 |
| Rs 15,000 and above | Rs 200 |
Eligibility Criteria for Registration
Registration under Karnataka’s professional tax becomes mandatory if an employee’s monthly salary or wages exceed ₹180,000. In such cases, employers, including sole proprietorships, partnerships, corporations, firms, and others, are obligated to register under the Karnataka Professional Tax Act and deduct a specified amount from the employees’ wages.
| Every employee is required to obtain a professional tax certificate from the relevant authority. Additionally, all individuals and professionals share the responsibility of registering under the professional tax system. |
Mode of Payment of Professional Tax Karnataka
For salaried workers: For salaried persons who are receiving salary on a month-to-month basis, the amount of professional tax is deducted by the employer from the salary amount as per the slab rate. This amount on behalf of the employee is deposited by the employer with the concerned authority of the state.
For self-employed people: Self-employed individuals are required to make payment of professional tax by contacting tax offices established in the state for the purpose of collecting tax.
For organisations: In this case, it is required by the employer to get registration according to the professional tax regulations of the state.
There are two forms of professional tax registration, such as
- Professional tax Karnataka employer registration
- Professional tax Karnataka employee registration
Professional Tax Karnataka Employer Registration
Employer registration is a mandatory process for all entities and businesses operating in Karnataka. This requirement applies regardless of whether the employees are actively engaged in working for the organization. The registration results in the issuance of a “Certificate of Enrollment,” provided by the Professional Tax Office.
This certificate contains essential details, including the amount of tax payable by the employer and the due date for payment. Failure to remit the professional tax within the stipulated time frame may result in penalties.
Remember, the tax rate is determined based on the number of employees employed by the organization. The following details outline the tax rate for employers in accordance with the Karnataka Shops and Commercial Establishments Act of 1961.
| Number of employees | Tax Rate (INR) |
| 0 | Nil |
| Between 1-5 | 1000 |
| Between 5-10 | 1500 |
| Higher than 10 | 2500 |
Take charge of your professional journey! Apply for professional tax effortlessly and ensure compliance, maximize benefits, and thrive in your career.
Professional Tax Karnataka Employee Registration
Employee registration for Proficient Duty in Karnataka involves the deduction of the tax amount by the employer on behalf of the employee, with the employer obtaining a registration certificate as well.
Monthly Professional Tax Return
Employers are required to make monthly payments of professional tax to the relevant authority on behalf of their employees. The tax amount is ₹200 per month for employees earning at least ₹15,000. The return must be filed within 20 days from the month when the professional tax was deducted. Failure to file within the stipulated time incurs a penalty of ₹250 per month.
Yearly Professional Tax Return
Employers with an enrollment certificate must make professional tax payments by April 30 each year, as per the applicable tax slab. Additionally, they are obligated to file an annual return within 60 days from the close of the financial year, providing details of salaries and professional tax deductions for each employee.
E-payment of Professional Tax Karnataka
The process of tax payment is streamlined and can be done online through platforms like e-PRERANA. Professionals and registered employers can electronically file returns and make payments, generating certificates without visiting Proficient Duty offices.
Offline Method of Payment of Professional Tax
Offline payment of professional tax can be done using methods like checks or demand drafts. Individuals need to provide details such as the check number, date, amount, and MICR code. After entering this information and clicking on “Add,” the connected details will appear at the bottom of the page. Clicking on the submit option generates a Payment Reference Number (PRN).
To complete the offline payment, individuals must visit a professional tax office with a unique PRN number and physically submit a check, demand draft, cash, or cheque. The acknowledgement receipt from the concerned officer enables the person to obtain the enrollment certificate and acknowledgement online.
Late Fee Penalty of Professional Tax
A penalty of 1.25% per month is imposed for delayed professional tax payments. The state government may charge a maximum penalty of 50% of the total unpaid professional tax amount.
Conclusion
In conclusion, it is advisable to make timely professional tax payments to avoid late fees. Vakilsearch offers valuable information on Karnataka professional tax, facilitating easy filing and payment of taxes. To know more, reach out to our experts today!
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