We all must have come across the term ‘Professional tax registration’ somewhere or the other. But did you ever try to find out what exactly is this PT registration is all about? The next time when you get your payslip, take a couple of minutes off to study the break-up of the deductions. You may come across the term ‘Professional Tax’. Do not panic or get confused with this term with Income tax. Both are altogether different terminologies like how a north pole and a south pole differ from one another.
However, your salary slip may not mention professional tax because not all Indian states impose it. The states that impose the professional tax are Andhra Pradesh, Assam, Bihar, Gujarat, Karnataka, Kerala, Madhya Pradesh, Meghalaya, Orissa, Sikkim, Tamil Nadu, Telengana, Tripura and West Bengal.
Now in this blog let us know what is a ‘Professional Tax is all about?
Professional tax is a tax imposed by the state government. Professional tax is levied under Article 276(2) of the Indian Constitution. The tax is deducted from an employee’s salary by the employer every month and the same is remitted to the state government.
There are 2 things to be considered with respect to professional tax.
- It is mandatory to pay the professional tax
- The tax amount paid under this head is exempted from income tax. This means the amount can be shown as a deduction from your salary income in your income tax returns.
Does professional tax have slab rates?
Professional tax varies from state to state. The amount of tax deducted is calculated on predetermined slab rates applicable on the basis of monthly salary. The tax deducted is usually around Rs. 200 a month, with the maximum payable being Rs. 2,500 for a year. The amount is deducted from one’s salary by the respective employers and the same is being deposited with the concerned government office, municipality office, or local district board.
All types of companies fall under the bracket of professional tax. Upon registration, it is advisable for all business entities to apply for PT registrations. If this tax is not paid then any employer with a ‘Certificate of Registration’ can be penalized by the government.
Is professional tax applicable for non-salaried people?
It is not only for those working in an organization on a regular salary are liable to pay professional tax, even non-salaried individuals earning a monthly income above a certain limit are eligible to pay professional tax. People who are specialized in their respective domains like doctors, chartered accountants, freelancers, journalists, Insurance agents, and all kinds of contractors are liable to pay the professional tax.
Since the professional tax varies from state to state, one must be aware of the prevailing tax rates of that particular state, especially if you are an independent professional. It is better to consult a tax consultant before making any payment under this head as the tax slabs differ every year.
The table below shows the taxable amount applicable for different states:
|STATE||SALARY||TAX (PER MONTH )|
|Maharashtra||10,000 and Above||Rs. 200|
|Karnataka||15,000 and Above||Rs. 200|
|West Bengal||40,000 and Above||Rs. 200|
|Madhya Pradesh||1.8 lakh and Above (Annually)||Rs. 212|
|Tamil Nadu||75,001 and Above (Half Yearly)||Rs. 1095|
|Gujarat||12,000 and Above||Rs. 200|
|Andhra Pradesh||20,000 and Above||Rs. 200|
Professional Tax – Rules & Regulations
Here are the rules and the guidelines that govern professional tax-
- A company needs 2 types of professional tax certificates. One is the Professional Tax Registration Certificate (PTRC) that is required for its role as an employer, and the other one is Professional Tax Enrolment Certificate (PTEC). This is for the company to deduct PT on salaries on a certain amount.
- One needs to obtain the ‘Certificate of Enrolment’ within 30 days from the date of becoming eligible to pay professional tax.
- Employers with a Certificate of Enrolment can be penalized if they fail to deposit the professional tax of their employees.
- A separate application has to be submitted by the company where they have their offices as per the requirement of the particular state where the workplace is situated.
- Professional tax need not be paid by foreign employees working in such organizations.
- The rules are applicable for professionals for Indians employed by any foreign diplomatic office, embassy or a consulate.
Employees who are drawing a monthly salary of less than Rs.15, 000 need not pay any professional tax. On the other hand, employees drawing a salary of more than Rs.15, 000 per month an amount of Rs. 200 will be deducted from their salary as professional tax.
So far we have studied about the professional tax eligibility, rules and the regulations, deductions etc. Now let us discuss how to register for Professional Tax in Bangalore.
Every individual engaged in any profession or a business in the state of Karnataka has to get the Professional Tax Registration. The following entities have to get the PT registrations.
- Hindu Undivided Family (HUF)
- Company (Public or Private limited)
- Any Corporate Bodies
- Any Society, Club or an Association
Exemptions from professional tax registration:-
- Senior citizens who have attained the age of 65 and above are exempted.
- Salaried or wage-earning deaf, dumb and blind persons.
- A physically handicapped person having 40% of permanent disability are exempted from paying professional tax.
- All charitable and philanthropic hospitals or nursing homes located in the taluk level in all districts of the State except Bangalore and Bangalore Rural District.
- Directors of Companies registered in Karnataka and nominated by the financing agencies owned or controlled by the State Government or by other statutory bodies.
- Technicians from foreign nationals employed in the state provided their appointments are approved by the Government of India for the purpose of exemption from payment of income tax for the said period are exempted from paying professional tax. (Exemption is for a period of 2 years from their date of joining the duty).
- Combatant and civilian non-combatant members of the Armed Forces (that includes Army, Navy and Air Force).
- Holders having permits of taxi or 3 wheeler goods vehicle are exempted from such tax.
- Institutes teaching Kannada or English shorthand or typewriting are also exempted from professional tax.
- A person having a single child who has undergone sterilization operation, subject to production of a certificate from the district surgeon, Government Civil Hospital for having undergone such operation are exempted from such tax.
- Central Para Military Force (CPMF) personnel’s are exempted from paying professional tax.
- Individuals running education institutions in respect of their branches teaching classes up to 12th standard or Pre-University Education need not pay any professional tax.
Certain documents are required for the purpose of PT registrations. They are;
- Address proof of the establishment
- Address proof of the partners, proprietors or directors as applicable
- PAN card
- Photo of the proprietor, partner or director as applicable
The process to register under Karnataka PT Act is simple. One can visit the Karnataka PT portal for registration. One also has the option to register online. Click on the link for PT enrolment. Submit the scanned documents along with the details about the establishment.
You may ask whether I will get a refund on a professional tax like how one will get a GST refund when an excess payment is made.
Well, that sounds like an interesting question?
Professional tax is deducted by an employer from your salary. Hence, the possibility of getting it back is remote. The least one can do is go ahead and claim professional tax as a deduction from your salary under Section 16 of income tax act. Therefore once professional tax is deducted from your salary don’t even imagine for any kind of refund or reimbursement.
Penalties for non-compliance on professional tax:-
Normally penalties are levied for non-compliance on professional tax. Any delay in obtaining the Registration Certificate will invite a fine of Rs.5/- per day. In case of non or late payment of professional tax, penalty will be 10% of the amount of tax. In case of late filing of returns, a fine of Rs. 1000/- per return will be imposed after the due date. After 1 month, a penalty of Rs. 2000/- will be imposed for subsequent months if professional tax is not paid.
For most of us it is baffling why a professional tax is collected at all. Why not just hike the rate of income tax by 0.1%? That will save everyone considerable trouble and at the same time generate as much, if not more revenue for the Government.
Well! This is not in our hands to take a decision about this as per our whims and fancies. It is the state government which has introduced these rules. No one can go against their rules nor can one object their regulations. If the state government has come up with such rules like professional tax registrations and PT deductions, it is better we adhere to their rules and the regulations. By violating their regulations nobody will like to fall in trouble. Hope you would have understood what I mean to say.
To know more about PT registrations and professional tax registration in Bangalore, Aavana can help you with the procedures.