How to pay professional tax online?

Professional Tax comes under the purview of the Goods and Services Tax (GST). This should not be confused with Income Tax.

All working professionals, including salaried people, self-employed individuals and businesses are liable to pay a ‘Profession Tax’ on the income they earn. Professional tax is a fixed amount (usually slab-based) levied by the respective state governments on all individuals earning through any medium. This is not to be confused with Income Tax, which is payable to the Central Government and levied as a percentage of the total income a person earns during a financial year. To avoid double taxation, the professional tax you pay can be deducted from the total taxable income for the purpose of filing your IT returns.

Who has to pay Professional Tax?

If you are a salaried individual, your employer automatically deducts the requisite tax (reflecting in your Form 16) from your salary and deposits the aggregate tax to the state government. The employer has to register for both Professional Tax Registration Certificate (PTRC), and Professional Tax Enrollment Certificate (PTEC) to deduct your professional tax and pay PTEC bill to the government on the behalf of the business.

What is PTEC registration and who needs it?

Those who are entrepreneurs and self-employed individuals such as lawyers, doctors, chartered accountants and other freelancers will have to get their PTEC registration done themselves to pay the Professional Tax amount to the government directly. The same can be done either through the local commercial tax department or via the online mode.

How is professional tax calculated?

Professional tax rules vary as per the state. Every state has its own laws and regulations to govern Professional Tax in their domicile. However, a maximum cap of Rs 2500 has been set on Professional Tax as per Article 276 of the Indian Constitution.

When it comes to minimum income slab, Professional tax in India varies from state to state. For example, Odisha levies no professional tax on a monthly salary up to Rs 5,000. It has multiple tax slabs for those earning between Rs 5,000 and Rs 10,000, levying a maximum of Rs 100 as professional tax, Rs 150 for those earning more than Rs 15,000, and Rs 200 for those earning above Rs 20,000 per month. Professional tax - Karnataka is nil up to a monthly income of Rs 15,000. Income more than Rs 15,000 has to pay Rs 200. In Maharashtra, professional tax slabs differ for men and women. There is no professional tax for men earning a monthly salary up to Rs 7,500 and women up to Rs 10,000. Anyone earning more than that pays Rs 200 as professional tax for all months except February (Rs 300 for February). 

The method for estimating your dues is very simple. You don’t need a Professional Tax calculator for it. Just take the monthly amount applicable to you and multiply it by the number of months you have actively worked within the financial year to arrive at your total payable tax amount.

Related: Should you stick to the old tax regime or move to the new one?

How is the professional tax calculated?

Professional tax rules vary as per the state. Every state has its own laws and regulations to govern Professional Tax in their domicile. However, a maximum cap of Rs 2500 has been set on Professional Tax as per Article 276 of the Indian Constitution.

When it comes to minimum income slab, Professional tax in India varies from state to state. For example, Odisha levies no professional tax on a monthly salary up to Rs 13,304. Income from Rs 13,304 to Rs 25,000 attracts a professional tax of Rs 125 per month and those earning above Rs 25,000 need to pay Rs 200 for all months except February (Rs 300 for February). Professional tax - Karnataka is nil up to a monthly income of Rs 15,000. Income more than Rs 15,000 has to pay Rs 200. In Maharashtra, professional tax slabs differ for men and women. There is no professional tax for men earning a monthly salary up to Rs 7,500 and women up to Rs 10,000. Anyone earning more than that pays Rs 200 as professional tax for all months except February (Rs 300 for February). 

The method for estimating your dues is very simple. You don’t need a Professional Tax calculator for it. Just take the monthly amount applicable to you and multiply it by the number of months you have actively worked within the financial year to arrive at your total payable tax amount.

Related: Professional Tax: Everything you must know about it

How to pay the professional tax?

Applicability of Professional Tax now comes under the purview of the Goods and Services Tax. Here is a step by step guide on the process of professional tax registration and how to pay your Professional Tax online:

1. Visit your state’s GST website and look for the ‘e-Payments’ tab.
2. Select your applicable status under the Statutory Order, enter your PAN/ TAN number along with the captcha image shown.
3. Next, you will see two options (Acts) – the Professional Tax Registration Certificate (PTRC) Act or Professional Tax Enrolment Certificate (PTEC) Act. The PTRC is applicable for a company or employer, and PTEC is the option to be selected by individuals, sole proprietors or partnership firms.
4. Select the financial year for which the tax has to be paid, the location, the amount as per the slab, your mobile number and then ‘Proceed to Payment’.
5. Choose from the credit/debit card or net banking option to make your payment
6. Download the acknowledgement receipt for your reference.

Consequences of non-compliance

The Professional Tax has to be paid by June 30 every year. For businesses that have enrolled May 31  will have to pay PTEC bill by the due date mentioned above. For PTEC registration post May 31, the Professional Tax has to be pad within 30 days. Hence, it is recommended that you register and receive an Enrollment Certificate (for individuals) or a Registration Certificate (for businesses) at the earliest. 

Inaccurate or false information will incur a penalty as decided by the assessing officer.

A penalty may be levied on delay in registration, non-payment and delay of payment of dues within the specified period. The magnitude of the penalty differs from state to state.

Businesses in Maharashtra may be charged a penalty of Rs 5 per day for each day of delay in obtaining a Registration Certificate. Alternatively, the assessing officer may levy a 10% penalty on the total amount due along with simple interest on late payment which ranges from 1.25% to 2% per month.

Individuals who have not complied with the state rules may have to pay a fixed penalty of Rs 1,000 to Rs 2,000 for late filing of professional tax.

Related: Income Tax Returns: Who should file them and when?

Fulfilling our duty

The Professional Tax that we pay, collected by the State Government, eventually flows into the reserves of our respective local municipalities. It’s with these funds that our municipalities are able to provide the public welfare services and social infrastructure that we use. Therefore, it is our responsibility to make a small contribution towards the betterment of the community we live in. Here's a short video about professional tax that will help you develop a more holistic understanding of the process.