Professional Tax
Easily setup a sole proprietorship with registrations, LEDGERS and business bank account.
Benefits
- Fewer legal formalities than LLP.
- Associated with the GST and income tax departments.
- Full control over the business for the sole proprietor.
- No separate business tax filings.
- Easy to disassemble.
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A Way to Quick & Smooth Professional Tax Payment
Professional tax payment is mandatory if you earn a regular salary through employment. However, every state has a different slab system, which means the professional tax to be paid changes according to the state. Do not get confused between income tax and professional tax because the latter is more minor than the former, which comes under the Central Government.
What is Professional Tax?
Professional tax (PT) is a levy imposed by certain Indian states on individuals engaged in professions, trades, callings or employment. This amount goes to the state government for various developmental initiatives. Professional tax registration should be done within 30 days of beginning the practice or employing staff. Every state does not impose this tax. For instance, Maharashtra and Karnataka do, but Delhi and Haryana don’t.
Professional Tax Registration Process
Step 1:
For a Professional Tax Certificate, fill out the application form (Form 1) with the required documents.
Step 2:
Apply to the state government and submit a copy to the tax department.
Step 3:
After scrutinising the documents, the authority will issue you a professional tax certificate.
As an employee, you do not have to make professional tax payment separately because your employer deducts it from your salary. It is how your employer clears liabilities with the state government.
If you are an employer, you must complete a professional tax registration and get a registration certificate. For that, fill out Form 1, which is available on the Sales Tax India website.
Depending on the state legislation, you must pay professional tax as a freelancer.
Documents for Professional Tax Registration
You must submit documents according to the category you are applying for
- Address proof, identity proof, PAN card and passport-size photos of the owner and director of the company.
- Partnership agreement and certificate of incorporation of the company.
- MoA and AoA.
- Details regarding the employees and salaries paid.
- NOC from the owner of the property.
- Other licences and registrations according to the business.
You may return to the professional tax payment and registration once you collect all documents.
Professional Tax Due Date
You must pay the professional tax before 30 June if your company was registered before 31 May of that fiscal year. Those registered before 31 May should pay professional tax within a month of registration.
Exemptions from Professional Tax Payment
- Individuals with intellectual and permanent physical disabilities.
- Members of the Armed Forces that are governed by the Army Act, Navy Act, and Air Force Act.
- Senior Citizens above 60 years of age.
- Parents of physically challenged kids.
- Substitute labourers in the textile industry.
An Authentic Way to Reduce Your Burden of Professional Tax Payment
Conclusion
The financial burden is minimal compared to other taxes in professional tax registration. You need to understand your obligations, including registration, due dates, and potential exemptions for responsible tax citizenship. Paying professional tax is compulsory and contributes to the revenue for your state to initiate developmental activities. Moreover, filing it is simpler compared to income tax and has minimum restrictions.
FAQs
Should I Pay Professional Tax if I Live in a Union Territory?
No, because a professional tax only comes under the State Law.
Who Should File Professional Tax Returns? The Employees or the Employers?
The employers must file professional tax returns because they deduct an amount from the employee’s take-home salary as professional tax.
Does the Employer Deduct the Same Amount for Professional Tax from Every Employee’s Salary?
No, the amount deducted from an employee’s salary in the name of professional tax depends on the actual salary.
Should Every Employer of a Company Pay Professional Tax?
Professional tax is applied to the whole company and not a specific employer.
What Categories of People in Maharashtra Should Pay Professional Tax?
Individuals, Cooperative societies, HUFs, companies or associations of people are the categories that can pay professional tax.
