Introduction about Professional Tax Registration
Professional tax registration is a form of taxation imposed by state governments in India on individuals and entities engaged in specific professions, trades, or employ people in certain professional roles. It is a state-level tax and varies in terms of rates and regulations from one state to another. The tax is collected to contribute to the revenue of the state and to support local administrative activities and services.
Professions such as consultants, lawyers, doctors, accountants, and other individuals engaged in similar vocations, as well as businesses that employ people in such roles, are subject to professional tax. The tax is typically deducted by the employer from the salaries of employees falling under the tax’s purview, and it is then remitted to the state government.
Types of Professional Tax Registrations in India
There are two types of Professional tax Registrations in Indian which are as follows:
- Professional Tax Enrollment Certificate (PTEC)
- Professional Tax Registration Certificate (PTRC)
1. Professional Tax Enrollment Certificate (PTEC): PTEC registration is applicable to individuals and businesses engaged in certain professions or vocations that are liable to pay professional tax. This includes professionals like consultants, lawyers, doctors, chartered accountants, and other similar vocations. The PTEC registration is obtained by the individuals or businesses themselves, and they are responsible for paying the professional tax directly to the state government.
The process for obtaining a PTEC involves submitting an application, providing relevant details about the profession, and paying the applicable fees. Once registered, the individual or business will receive a certificate as proof of their registration and their obligation to pay professional tax.
2. Professional Tax Registration Certificate (PTRC): PTRC registration is applicable to employers who have employees falling under the scope of professional tax. Employers are responsible for deducting professional tax from the salaries of their employees and remitting the collected tax amount to the state government. This registration is essential for businesses to fulfill their obligation to deduct and remit professional tax on behalf of their employees.
Employers need to apply for PTRC registration and provide details about the company, its employees, and other relevant information. Once registered, employers will receive a certificate that acknowledges their responsibility to deduct professional tax from employee salaries and pay it to the state government.
Important Note: The Company and LLP will only need to pay PTEC and not PTRC and Directors and Partners if there are no payable employees.
Also Read-Difference between Shop And Establishment Act And Contract Labour License
Government Advantage by Professional Tax Registration
Professional tax serves as a significant source of revenue for state governments, contributing to the development of local infrastructure, administrative facilities, and public services. The amount paid as professional tax can often be deducted from the taxpayer’s taxable income, thereby reducing their overall tax liability. This necessitates a clear understanding of the regulations in the relevant state to ensure proper compliance. Individuals and businesses are advised to seek expert guidance to ensure they meet all their professional tax obligations and avoid potential penalties.
Know about the Professional Tax Rates under Professional Tax Registration
Professional Tax Rates in Major States of India
Professional Tax Rate in Andhra Pradesh
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Less than Rs. 15,000 | Nil |
| Rs. 15,000 to less than Rs. 20,000 | Rs. 150 |
| Rs. 20,000 and above | Rs. 200 |
Professional Tax Rate in Gujarat
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Up to Rs. 5999 | Nil |
| Rs. 6000 to Rs. 8999 | Rs. 80 |
| Rs. 9000 to Rs. 11999 | Rs. 150 |
| Rs 12000 and above | Rs. 200 |
Professional Tax Rate in Karnataka
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Up to Rs. 15,000 | Nil |
| Rs. 15,001 onwards | Rs. 200 |
Professional Tax Rate in Kerala (Half yearly income slabs and half yearly tax payment)
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Up to Rs.11,999 | Nil |
| Rs.12,000 to Rs.17,999 | Rs. 120 |
| Rs.18,000 to Rs. 29,999 | Rs. 180 |
| Rs.30,000 to Rs. 44,999 | Rs. 300 |
| Rs.45,000 to Rs. 59,999 | Rs. 450 |
| Rs.60,000 to Rs. 74,999 | Rs. 600 |
| Rs.75,000 to Rs. 99,999 | Rs. 750 |
| Rs.1,00,000 to Rs. 1,24,999 | Rs. 1000 |
| Rs.1,25,000 onwards | Rs. 1250 |
Professional Tax Rate in Maharashtra
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Up to Rs. 7,500 | Nil (for male) |
| Up to Rs. 10,000 | Nil (for female) |
| From Rs. 7,500 to Rs. 10,000 | Rs. 175 (for male) |
| Rs. 10,000 onwards | Rs. 200 for 11 months + Rs. 300 for 12th month |
Professional Tax Rate in Telangana
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Up to Rs. 15,000 | Nil |
| Rs.15,001 to Rs.20,000 | Rs. 150 |
| Rs.20,001 onwards | Rs.200 |
| Up to 5 years (For professionals such as legal practitioners, CA, architects, etc.) | Nil |
| Over 5 years (For professionals such as legal practitioners, CA, architects, etc.) | Rs. 2,500 (per annum) |
Professional Tax Rate in West Bengal
| Income per Month | Tax Rate/Tax Amount (p.m.) |
|---|---|
| Up to 10,000 | Nil |
| 10,001 to 15,000 | Rs. 110 |
| 15,001 to 25,000 | Rs. 130 |
| 25,001 to 40,000 | Rs. 150 |
| 40,001 and above | Rs. 200 |
Benefits of Professional Tax Registration Online in India
Professional Tax Registration Online in India offers several benefits, including potential income tax deductions, legal compliance, efficient processes, contribution to public welfare, and a balanced tax impact on taxpayers. However, it’s important to note that specific details and benefits may vary based on the regulations of each state within India.
- Income Tax Deduction Eligibility: Professional tax payments made by workers are eligible for deductions under Section 16 of the Income Tax Act, 1961. This means that any professional tax paid by a taxpayer within the same tax year can be deducted from their taxable income for that year. This deduction can help reduce the overall tax liability of the individual.
- Avoidance of Fines and Penalties: Enrolling in Professional Tax registration is a legal requirement in many states. Failing to comply with this requirement can result in fines and penalties imposed by the authorities. These fines may increase over time, so timely registration helps individuals and businesses avoid unnecessary financial liabilities.
- Efficient Registration Process: Professional Tax law is relatively straightforward, and the online registration process is designed to be efficient. Online platforms enable swift processing of registration applications, saving time for applicants and government authorities alike.
- Contribution to Social and Economic Initiatives: The funds collected from professional tax payments are utilized by state governments to support various social and economic initiatives. These initiatives can range from education and healthcare to infrastructure development, benefiting the overall welfare of society.
- Minimal Impact on Taxpayers: Professional tax is typically structured in a way that the impact on taxpayers is minimal. The tax rates are often set based on salary ranges, ensuring that the taxes withheld from individuals’ salaries are proportionate and manageable. This approach aims to minimize the burden on taxpayers while still generating revenue for the government.
Are there any penalties in Case of Violation of Professional Tax Regulation?
Once again, the penalties for failing to get Professional Tax Registration or failing to pay the professional taxes within the due date each month vary depending on the state in the country. However, in most cases, a penalty of Rs. 5 per day is imposed in case of failure to obtain Professional Tax Registration Online. For any professional tax payments made after the due date, 10% interest will be added to the total amount owed.
Documents Required for Professional Tax Registration in India
- Certificate of Incorporation like MOA, AOA in case of Private Limited Company or LLP Agreement in case of LLP Company.
- PAN card of the Company/LLP (attested by the Company’s Director).
- Bank account details of the Company with a bank statement and cancelled cheque.
- Proof of Registered Office along with a NOC from the premise owner.
- Board Resolution or the Declaration of consent by the concerned Partner.
- Address proof, PAN card and passport size photos with the signature of all the Directors.
- Salary and attendance register.
- Shop & Establishment Registration Details.
How apply for Professional Tax Registration online?
For Registration click on below link
Visit website for registration professional Tax- Department of Goods and Services Tax | Department of Goods and Services Tax – Government of Maharashtra, India (mahagst.gov.in)
Also follow below video for registration of Professional Tax (PTEC and PTRC Registration): In below video, i have shown all step by step process of registration of Professional Tax (PTEC and PTRC Registration)
Click on video:
FREQUENTLY ASKED QUESTIONS
What is the maximum amount of Professional Tax to be paid?
Employers are required by law to withhold professional tax from employee paychecks, with certain limited exceptions. The taxation of professionals in India differs by state. Annually, the highest professional tax cannot exceed Rs. 2,500.
What are the due dates to file and pay Professional Tax?
If an employer employs more than 20 people, he must make the professional payment within 15 days after the end of the month. However, if an employer has fewer than 20 employees, he must make quarterly professional tax payments.
Is Shop & Establishment registration also required professional tax registration?
Institutions run by the national or state governments are not subject to the Shop and Establishment Act in any way. Consequently, establishments owned by the national and state governments are exempt from Shop and Establishment Act registration requirements.
Is a freelance professional liable to pay Professional Tax?
Yes, freelancing professionals are subject to Professional Tax if their income exceeds the threshold stipulated by the Professional Tax Laws of the state in which they reside.
When does the employer become responsible for tax payment?
The obligation date occurs when the employer pays the wages to the employees and deducts the tax for the first time from the salary.
Who is responsible for the payment of the tax?
Taxes must be paid by the following entities: firms, corporations, Hindu undivided families, societies, corporations, clubs, associations, and other corporate bodies.
If the employer is registered under the MVAT Act, is registration under the professional tax Act required?
Yes. Employers who have registered under the MVAT Act must also register under the Professional Tax Act. However, he must have hired at least one employee earning over 5,000 INR per month.
What are the consequences for submitting false information?
In accordance with section 5(6) of the professional tax Act, a person is required to pay three times the tax as a penalty to the state government for reporting incorrect information.
Do I have to be there in person to register for professional tax in India?
No, the entire professional tax registration procedure in India is conducted online using the YMW FINANCIAL SERVICES Help Desk (08298057771). The applicant’s physical presence would not be necessary.