A company working in different states is required to register for professional tax in all the states it is present at.
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While Budget 2019 sprang happy surprises, reducing tax payable for employees earning below 5 lakhs, there are numerous other taxes that continue to be levied on working professionals, the most important one being, Professional Tax. Most employees receiving a fixed salary at the end of a month come across a deduction in their Salary Slip by the name of “Professional Tax.” Unlike the name, it does not come across as a tax on professionals but a tax on employment, trade and profession. It is payable by employees, salaried persons, wage earners and professionals such as Chartered Accountants, Company Secretaries, Cost Accountants, etc.
It is a tax levied by the State Government, and hence they have the option to decide whether and how much of PT should be collected. Currently, the following states levy this tax.
4. West Bengal
5. Andhra Pradesh
8. Tamil Nadu
15. Madhya Pradesh
|Monthly Salary / Wage<br>(Basic +DA)||Karnataka||Andhra Pradesh|
|Upto Rs 15,000||Nil||Nil|
|Between 15,001 and 20,000||200/ month||150/ month|
|More than 20,000||200/ month||200/ month|
There are many simple tools for ascertaining the tax liability for a person belonging to a specific state.
An employer/professional must have dual registration. The two registrations required are:
A) Professional Tax Registration Certificate to pay tax on trade or profession
B) Professional Tax Enrollment Certificate to deduct such tax from the salaries, trade, etc.
For offices with multi-state presence, since the tax regimes vary in each state, a separate registration is required for each such office established under different State Legislations. Moreover, Registration Certificate has to be obtained by an employer within 30 days of the appointment of staff.
Employers are responsible to deduct PT from each monthly salary payment and ensure such deduction is mentioned in the salary slip and Form 16 of employees.
Since a partnership firm, company or sole proprietor is carrying on a Trade or Profession in the capacity of a person, they, too are liable to pay this tax. Freelancers having no employees working under them must also register subject to monetary threshold limit given by the State.
Tax may be paid in online or offline mode and a challan be generated for each such successful payment. Employers must also file a Professional Tax Return in a prescribed form at regular intervals, where such time limits vary in each state.
|Employer has employed||Make payment within|
|More than 20 Employees||15 days |
from end of the month
|20 employees or less||15th of next month |
from the end of each quarter
Penalties for non-compliance:
While each state has the ability to fix penalty based on its own tax laws, the regime is generally centered around the following penalties:
|Delay in||Non-compliance||Penalty levied by most states|
|Registration||Non-registration when the employer was liable to be registered||Rs 5 / day|
|Payment||Non-payment of tax or payment after the due date.||10 % of the amount of tax|
|Filing of Return||Non-filing of Tax Returns or delay in filing||Rs 1000/ return delayed by 1 month|
Rs 2000/return for a further delay.
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