- Date : 18/11/2019
- Read: 4 mins
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.
On the other hand, self-employed individuals such as lawyers, doctors, chartered accountants and other freelancers need to pay the Professional Tax to the government directly. The same can be done either through the local commercial tax department or via the online mode.
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, it varies. For example, Odisha levies a professional tax of Rs 30 on a monthly salary between Rs 5,001 to Rs 6,000. Income below Rs 5,000 has no professional tax. Karnataka levies no professional tax up to a monthly income of Rs 15,000. Income more than Rs 15,000 has to pay Rs 200. In Maharashtra, there are different slabs for men and women. There is no professional tax for men earning a monthly salary up to Rs 7500 and women up to Rs 10,000. Anyone earning more than that pays Rs 200 as professional tax.
How to pay the professional tax?
Professional Tax now comes under the purview of the Goods and Services Tax. Here is a step by step guide on how to pay your Professional Tax online:
- Visit your state’s GST website and look for the ‘e-Payments’ tab.
- Select your applicable status under the Statutory Order, enter your PAN/ TAN number along with the captcha image shown.
- 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.
- 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’.
- Choose from the credit/debit card or net banking option to make your payment
- Download the acknowledgement receipt for your reference.
Consequences of non-compliance
The Professional Tax has to be paid by June 30 every year. 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 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 1000 for late filing of professional tax.
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.