Professional Tax In Karnataka, Maharashtra and Telangana has been a hot topic across India. Keep reading to know more!
Introduction
In the year 2024, notable changes have emerged in the tax landscape of the Indian states of Karnataka, Maharashtra, and Telangana, specifically in the form of Professional Tax.
This tax, aimed at professionals across various fields, has undergone revisions in its structure and rates. The affected professions include doctors, lawyers, chartered accountants, engineers, and architects.
Such recent developments in professional tax regimes reflect the evolving fiscal policies within these states, impacting professionals and contributing to state government revenue.
How Is the Professional Tax in Karnataka, Maharashtra and Telangana in 2024
The professional tax in Karnataka, Maharashtra and Telangana is a tax levied by the state governments on people employed in certain professions. The amount of tax varies from state to state.
| State | Monthly Income | Professional Tax (PT) |
| Karnataka | Above ₹15,000 | ₹200 |
| Karnataka | ₹10,001 – ₹15,000 | ₹150 |
| Karnataka | ₹5,001 – ₹10,000 | ₹100 |
| Maharashtra | Above ₹25,000 | ₹250 |
| Maharashtra | ₹20,001 – ₹25,000 | ₹200 |
| Maharashtra | ₹10,001 – ₹20,000 | ₹150 |
| Telangana | Above ₹10,000 | ₹200 |
| Telangana | ₹5,001 – ₹10,000 | ₹100 |
Why Are Professionals Required to Pay Tax?
Professionals are required to pay tax because they earn income from their profession. This income is taxed at the same rate as other forms of income, such as wages or investments. Professionals must also pay taxes because they may use their professional skills to provide services to others.
For example, if a professional provides consulting services, they may be required to pay tax on their fees.Some professionals must also pay taxes because they belong to a professional organisation. Overall, professionals must pay taxes to earn income from their profession or provide services to others.
When Is the Period of Assessment for Professional Tax?
The period of assessment for professional tax in Karnataka, Maharashtra and Telangana is from the 1st of April to the 31st of March of the following year.
What Are the Documents Required for Professional Tax?
To register for professional tax in Karnataka, Maharashtra, or Telangana, certain documents are necessary. These documents include your PAN card, Aadhar card, and a copy of your most recent income tax return. Additionally, you are required to furnish evidence of your profession, such as a registration certificate issued by the relevant authority in your respective state.
How Is Income Tax Determined for Professionals?
Determining income tax for professionals involves considering various factors, including their total income, allowable deductions, and applicable tax slabs. In India, the income tax for professionals is calculated based on the individual’s income from their profession and other sources. The process involves the following key steps:
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Calculation of Gross Income
- Professionals need to determine their gross income, which includes earnings from their profession, consultancy fees, and any other income sources.
- Gross income may also include income from house property, capital gains, and other taxable avenues.
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Deductions and Exemptions
Professionals are eligible for certain deductions and exemptions under the Income Tax Act. Common deductions include those under Section 80C (like investments in Provident Fund, insurance premiums, etc.), Section 80D (health insurance premiums), and others. Exemptions may apply to specific allowances and perquisites received by professionals.
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Computing Taxable Income
After considering deductions and exemptions, the taxable income is calculated by subtracting these amounts from the gross income.
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Applying Tax Slabs
The taxable income is then subjected to the applicable income tax slabs. In India, income tax slabs are structured progressively, with higher rates for higher income levels.
Different tax slabs exist for individuals below 60 years, senior citizens (60-80 years), and super senior citizens (above 80 years).
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Calculating Tax Liability
The income tax liability is calculated based on the applicable tax slab rates. Professionals may use income tax calculators or consult tax professionals to determine their exact tax liability.
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Filing Income Tax Return (ITR)
Professionals are required to file their income tax return (ITR) with the relevant details of income, deductions, and taxes paid.
The deadline for filing ITR and the appropriate form (such as ITR-3 for professionals) should be adhered to.
Professionals must maintain accurate records of their income, expenses, and investments to ensure a correct calculation of taxable income. Seeking guidance from tax professionals can help professionals optimize their tax liabilities and comply with tax regulations.
The Bottom Line: How Can You Ensure That Your Firm’s Professional Tax Is Paid?
If you operate a business in Karnataka, Maharashtra, or Telangana, ensuring the timely payment of your professional tax is crucial. Professional tax is a government-imposed tax on businesses and professionals.
There are several measures you can take to guarantee the payment of your professional tax.
- Firstly, ensure that your business is registered with the appropriate authorities, allowing you to understand your business’s professional tax liability.
- Secondly, maintain accurate accounting records to track your professional tax liability, facilitating the timely filing of your professional tax return and payment.
- Thirdly, consider enlisting the services of a professional tax consultant like Vakilsearch. A professional tax consultant can assist you in comprehending your tax liability and ensuring timely payment.
By adhering to these guidelines, you can make certain that your business fulfills its professional tax obligations promptly, thereby avoiding penalties.
