India what is professional tax

The state government levies professional tax, and hence the rate differs from state to state. Each state has its own laws and regulations to govern professional tax.

However, there is a common slab system that is on the basis of the income to levy this tax. Also, Article of the Constitution empowers the state government to levy professional tax. Article provides a maximum cap of INR 2, Hence, beyond this amount, one cannot charge this tax on any individual. Professional tax is collected by the Commercial Tax Department of respective states on behalf of the municipality corporation.

In the case of employees, the professional tax is collected by the employer. Additionally, the employer also being an entity running a business will have to pay professional tax.

The employer can be a corporate, partnership firm or a sole proprietary. They will have to pay professional tax based on the monetary threshold if any provided by the respective state government. The employer needs to register themselves and obtain a professional tax registration certificate.

This will allow them to pay professional tax on their business. They will also need a professional tax enrolment certificate, which will enable them to deduct tax from their employees and pay it to the Commercial Tax Department. If the business needs to operate in several states, then a separate registration is required in each state.

Any person running a freelancing business will also be liable to pay professional tax as per the monetary threshold if any provided by respective states legislation. They will have to register themselves with the state registration and pay tax according to their income threshold.

The following is a step by step process taxpayers can follow to pay this tax online:. For example, if Mr. Nithin is a registered employer, then he needs to enter the Professional Tax Registration Number. Along with the number he also has to enter the name of the company or firm and the specific office for which he is making the payment this is in case one has multiple offices across India. The above step by step process is for online payments. Additionally, taxpayers can also pay the tax directly at the district sales tax office.

However, for this, one has to fill all the details in the required form physically and make cash payment. Moreover, a P-tax payment is important. Therefore, non compliance will attract penalties. Hence, one should make sure that profession tax payment is done on or before the due date. According to the professional tax regulations, a business must register themselves.

Further, there are also penalties for not making the payment within the due date and also failing to file the return within the specified due date. Yes, Professional Tax is applicable even for professionals, if income exceeds the specified limit as per your Professional Tax Laws applicable in the state where you live.

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