Know Whether You Are Eligible for Paying Professional Tax

Who Is Liable to Pay Professional Tax in India

As per the Indian tax laws, professional tax is levied on individuals who are engaged in any sort of profession or trade. This includes salaried individuals, self-employed professionals, and those engaged in business. The amount of professional tax that one has to pay varies from state to state.

In most cases, the employer is liable to deduct professional tax from the employee's salary and deposit it with the concerned authorities. However, in some cases, the individual themself may have to pay professional tax. For instance, if an individual is practicing a profession or carrying out a trade without registering themself with the concerned authority, they will be liable to pay professional tax.

The amount of professional tax that is payable depends on various factors such as the nature of profession/trade, annual income, etc. In some cases, a fixed amount has to be paid regardless of the income earned. For instance, in Maharashtra, every person who is engaged in any sort of profession or trade has to pay a minimum of ₹200 per annum as professional tax.

Those who are required to pay professional tax can do so through different modes such as online payment, challan payment, etc.

Which States in India Collect Professional Tax

In India, professional tax is levied by the state governments and not by the central government. So, it varies from state to state. There are almost 26 states in India that collect professional tax. They are:

Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Mizoram, Nagaland, Odisha (Orissa), Punjab, Rajasthan, Sikkim, Tamil Nadu, Telangana (Telengana), Tripura, Uttar Pradesh (UP), Uttarakhand and West Bengal.

The rate of professional tax also differs from state to state. It is generally a fixed amount or a certain percentage of income earned. In some states like Maharashtra and Karnataka , there is a slab system wherein the tax amount increases as the income increases. The maximum amount of professional tax that can be levied in a year is ₹2200 in Maharashtra and ₹200 in Karnataka.

How Is Professional Tax Calculated

In order to calculate the professional tax, one needs to consider the following points:

• The gross salary or fees earned by the individual in a financial year.
• The number of days worked in a month.
• The rate of professional tax applicable as per the state in which the individual resides.

What Are the Benefits of Paying Professional Tax

The main benefit of paying professional tax is that it helps in the development of the state. The money collected as professional tax is used by the government for various developmental activities. It is also used for providing basic amenities and infrastructure facilities to the people of the state.

Another benefit of paying professional tax is that it helps in creating employment opportunities. The money collected as professional tax is used by the government for various developmental activities which in turn create job opportunities.

Lastly, paying professional tax contributes to the overall growth of the economy. The money collected as professional tax is used by the government for various developmental activities which help in boosting the economy.

Professional Tax Certificate

A professional tax certificate is a document that proves that an individual is authorised to practice a profession in India. The certificate is issued by the Professional Tax authority of the state in which the individual wishes to practice their profession.

To be eligible for a professional tax certificate, an individual must first meet the following criteria:

• They must be a citizen of India
• They must be at least 18 years of age
• They must have completed their professional education from a recognised university or institution

Once these criteria are met, an individual can then apply for a professional tax certificate by submitting the following documents:

• A completed application form
• - A copy of their passport or other valid photo ID
• A copy of their professional education certificates

Professional Tax Registration Process

The process of registering for professional tax registration is as follows:

• Individuals need to obtain a registration certificate from the concerned authority in their respective state
• They need to submit an application form along with the registration fee.
• After the submission of the form and fee, the individual will be provided with a registration number which is to be used for future correspondence.

Documents Required

• Residence proof - This could be in the form of a ration card, utility bill or any other document which proves that you are a resident of the state where professional tax is levied.
• Proof of identity - This could be in the form of your PAN card, Aadhar card, passport or any other valid photo ID proof.
• Income proof - This could be in the form of your latest salary slip or ITR (Income Tax Return) statement showing your annual income from your profession.
• Application form - This can be obtained from the office of the concerned authority in your state where professional tax is levied.

Who Are Exempted From Paying Professional Tax

• Members of the armed forces: Army personnel, Navy personnel, Air Force personnel, and members of the paramilitary forces are exempted from paying professional tax.
• Government Employees: Employees of the Central Government, State Government, and local bodies are exempted from paying professional tax.
• Teachers: Teachers employed in recognised educational institutions are exempted from paying professional tax.
• Doctors: Doctors registered with the Medical Council of India are exempted from paying professional tax.

Why Vakilsearch?

• We keep ourselves updated with the latest changes in Indian tax laws so that you don't have to face any trouble.
• We provide simple and easy to understand explanations for all the concepts so that you can easily grasp them.
• Our team of experts can guide you through the entire process and help you save money on your taxes.

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