Professional tax is a tax that is levied by a state government on all individuals who earn a living through any medium. This should not be confused with the definition of professionals that indicates people such as doctors. This is a tax that is to be paid by every single earning individual. The calculation and amount collected may differ from one state to another but it has a limit of Rs. 2500 per year.
Applicability
Profession tax is applicable on the following classes of persons:
- An Individual
- A Hindu Undivided Family (HUF)
- A Company/Firm/Co-operative Society/Association of persons or a body of individuals, whether incorporated or not
When to take Registration ?
Professional Tax Registration is mandatory within 30 days of employing staff in a business or, in the case of professionals, 30 days from the start of the practice. Professional tax needs to be deducted from the salary or wages paid amount. Application for the Registration Certificate should be made to the assesses state tax department within 30 days of employing staff for his business. If the assesses has more than one place of work, then application should be made separately to each authority with respect to the place of work under the jurisdiction of that authority.
If an employer has employed more than 20 employees, he is required to make the payment within 15 days from the end of the month. However, if an employer has less than 20 employees, he is required to pay quarterly (i.e. by the 15th of next month from the end of the quarter).
Documents required for taking Registration of Professional Tax
- Address proof of establishment.
- Address proof of partners, proprietor or directors as applicable.
- PAN of partners, proprietors and directors as applicable.
- Photo of partners, proprietors and directors as applicable.
- Salary details of employees.
- Financial statements of the establishment.
- Certificate of Incorporation, MOA & AOA
Income tax rebate of professional tax
Profession Tax Is Deductible Under Section 16 (iii) Of The Income Tax Act
According to Section 16 (iii) of the Income Tax Act 1961, the profession tax paid by an employee is allowed as a deduction from his/her gross salary income.
However, A maximum of Rs. 2,500 can be levied as professional tax on any person per financial year.
For any queries or requirements contact
CS Arpit Garg
8447773833