Professional Tax Registration in India
Professional Tax (P. Tax) is a state-level tax collected by the governments of specific states in India from employees, professionals, and business owners. The tax is applicable in states like Karnataka, Bihar, West Bengal, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, and others. It applies to a wide range of individuals, from business owners to professionals, and even self-employed persons. Employers are responsible for deducting the tax from employees' salaries, while self-employed individuals must take responsibility for registering and paying the tax directly.
It is essential to register for Professional Tax promptly to avoid penalties and ensure compliance with state regulations. Professional Tax registration not only ensures legal adherence but also enhances your business’s credibility, helps reduce tax liabilities, and streamlines financial planning.
WHAT IS PROFESSIONAL TAX REGISTRATION?
Professional Tax Registration is the process of enrolling employees and organizations with the respective state governments to ensure compliance with Professional Tax laws. It is mandatory for any individual or organization earning income to register.
WHO IS LIABLE TO PAY PROFESSIONAL TAX?
This tax is applicable to a wide range of individuals and organizations, including:
- Individuals earning income from salary or professional practice (e.g., lawyers, doctors, teachers, chartered accountants, etc.).
- Hindu Undivided Families (HUF)
- Companies/Firms/Cooperative Societies/Associations (whether incorporated or not)
Both employers and employees enjoy several benefits from EPF registration:
- Risk Mitigation: EPF acts as an emergency fund, providing financial security during unforeseen circumstances.
- Single Provident Fund Account: Employees maintain the same EPF number throughout their career, even when changing jobs, ensuring easy access to funds.
- Employee Retention: Offering EPF as a benefit helps businesses retain talent and attract new employees, as it provides long-term financial security.
- Retirement Savings: EPF savings serve as a retirement fund that employees can access after meeting specific eligibility criteria.
- Market Reputation: Companies providing EPF benefits enhance their reputation and appeal in the job market.
- Employee Deposit Linked Insurance Scheme (EDLI): EPF members are eligible for insurance coverage under EDLI, ensuring a safety net for employees' families.
- Pension: Contributions to the EPF also go towards an employee’s pension fund, ensuring a source of income after retirement.
Advantages for Employers and Employees:
Professional Tax for Individuals: Self-employed professionals (freelancers, consultants) need to register for Professional Tax in their respective states. They are required to pay the tax directly to the state government.
Professional Tax for Employees: Employers are responsible for deducting Professional Tax from employees' salaries and submitting the amount to the state authorities. This makes tax compliance easier for both the employer and the employees.
Filing Professional Tax: If an individual is both employed and self-employed, they must file Professional Tax returns and make payments accordingly to reduce penalties.
To register for Professional Tax, you will need the following documents:
- Certificate of incorporation (for businesses)
- Address proof of establishment
- PAN card
- MOA and AOA (for companies)
- Salary details of employees
- Aadhaar card of the professional
- Attendance register and salary register
Online Professional Tax Registration Procedure:
FilingIn simplifies the Professional Tax registration process. Here's how we make it easy for you:
- Eligibility Check: We verify whether your profession or income requires Professional Tax registration based on your state.
- Contact Us: Reach out to us via phone, email, or our online contact form to begin your registration process.
- Payment Assistance: We guide you through the payment process for Professional Tax registration.
- Application Processing: Our experts file the necessary documents with the relevant authorities on your behalf.
- PTEC Recovery: Once your application is processed, we ensure you receive your Professional Tax Enrollment Certificate (PTEC) promptly.
Offline Professional Tax Registration Procedure:
If you prefer to register offline, follow these steps:
- Visit the Tax Office: Head to the local tax office or municipal corporation.
- Fill the Application Form: Complete the registration form with personal/business details and income proof.
- Attach Required Documents: Provide documents such as PAN card, address proof, and business registration.
- Submit the Form: Submit the filled form and documents for processing.
- Receive Registration Certificate: After verification, you will receive your Professional Tax Registration Certificate.
States and union territories that impose professional tax registration in India include:
- Applicable States: Andhra Pradesh, Assam, Bihar, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu, West Bengal, and more.
- Non-Applicable States: States such as Delhi, Goa, Jammu and Kashmir, Ladakh, Rajasthan, Uttar Pradesh, Uttarakhand, etc.
Why This States are Applicable?
States like Andhra Pradesh, Assam, Bihar, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu, West Bengal, and others are applicable for professional tax (PT) registration because they have chosen to impose PT based on their state-specific legislation. Here’s why these states have professional tax:
- State Legislation:
- Professional Tax is part of the state's fiscal framework, where the state government has passed laws under Article 276 of the Indian Constitution, which allows states to levy PT on income earned by professionals and businesses within their jurisdiction.
- These states have specific PT acts or rules in place, outlining tax slabs, registration procedures, and remittance deadlines for businesses and individuals engaged in professions.
- Revenue Generation:
- Professional tax serves as a significant source of revenue for state governments, helping fund local development, welfare programs, and infrastructure.
- States like Maharashtra, Tamil Nadu, and Karnataka, with large populations and active workforce, benefit from collecting PT.
- Economic & Fiscal Policies:
- These states may have strong fiscal policies that include PT as a way to diversify their tax collection and ensure a stable revenue stream for state expenditures.
- PT helps in balancing state finances and generating consistent funds to support various public services.
- Business and Workforce Presence: Many of these states have a large presence of businesses, professionals, and industries, making it easier to implement and collect PT on a wide scale. The workforce is often engaged in various sectors that are liable to PT based on income slabs.
- Custom Tax Slabs: These states have established differentiated tax slabs based on income ranges, professions, or business types. This makes it adaptable to the income level or category of the professional/business, encouraging compliance.
- Administrative Convenience:
- States with professional tax registration are typically better equipped to administer PT through established systems and infrastructure for compliance, monitoring, and enforcement.
- The implementation of PT registration becomes simpler in states with a large number of taxpayers or well-established collection systems.
- Local Government and Welfare: Revenue from PT is often allocated to local government bodies or used for welfare initiatives and regional development, benefiting the local community directly.
In summary, these states have adopted professional tax as part of their economic and fiscal strategy to generate revenue, manage large workforces, and maintain robust state administration. They rely on PT to support public infrastructure and services, and the application is widespread due to the structure of their taxation policies.
Why This States are Non-Applicable?
The reason some states like Delhi, Goa, Jammu and Kashmir, Ladakh, Rajasthan, Uttar Pradesh, Uttarakhand, and others may be considered non-applicable for professional tax registration is due to differences in state-specific tax laws. Not all states in India levy a professional tax (PT), and each state's legislative framework governs whether PT is applicable in that region.
Here are some specific reasons why certain states do not have professional tax or why registration might be non-applicable:
- State Legislation:
- Delhi: Delhi does not impose a professional tax on individuals or businesses. Instead, it relies on other taxes, such as VAT, GST, and income tax.
- Goa: Goa has a professional tax for certain categories, but it might be different in scope and structure compared to other states. There might be less widespread or stricter applicability.
- Jammu & Kashmir and Ladakh: Both these regions, previously governed by special provisions under Article 370, have had unique fiscal and taxation policies. After the reorganization of Jammu and Kashmir into two separate Union Territories in 2019, the laws regarding professional tax may still be evolving.
- Rajasthan, Uttar Pradesh, Uttarakhand: These states may not have adopted or implemented professional tax regulations as strictly as others. Rajasthan and Uttar Pradesh primarily focus on other forms of taxation, and in some cases, these states may not have provisions for professional tax registration or its collection.
- Constitutional Provisions: The Constitution of India allows states to levy professional tax under Article 276. However, some states have not chosen to do so, either due to local governance decisions or because of reliance on other forms of revenue generation.
- State's Fiscal Policies:: Some states, like Delhi, may avoid implementing professional tax as they rely on other taxes and sources of revenue. Instead, they may focus more on GST, excise, or other local levies to generate income.
- Low Population or Specific Jurisdictions: Smaller or more specific jurisdictions may not have a large enough workforce or business presence to warrant implementing a professional tax. In such cases, the administrative burden of introducing and maintaining a professional tax system may outweigh the potential revenue.
- Recent Legislative Changes: Some states might have recently moved away from or introduced exemptions to professional tax, especially after changes in governance, economic policies, or local financial needs.
In summary, whether or not professional tax applies to a particular state depends on that state's laws and fiscal structure. Some states have simply opted not to impose professional tax, while others have specific rules about its applicability based on different criteria (e.g., income levels, profession, business size, etc.).
State-Wise Professional Tax Acts:
Professional Tax varies across different states and union territories, with specific tax slabs, filing periods, and remittance deadlines. Below is a snapshot of the tax rates and deadlines in
|
State/Union Territory
|
Tax Deduction Period
|
Tax Slab
|
Deadline for Remitting Tax
|
|---|---|---|---|
|
Jharkhand
|
Quarterly
|
Up to ₹3,00,000: Nil,
₹3,00,001–₹5,00,000: ₹100,
₹5,00,001–₹8,00,000: ₹150,
₹8,00,001–₹10,00,000: ₹175,
Above ₹10,00,001: ₹208
|
15 May, 15 August, 15 November, 15 February
|
|
Karnataka
|
Monthly
|
Up to ₹25,000: Nil,
Above ₹25,000: ₹200
|
Before 20 of succeeding month
|
|
Kerala
|
Every Six Months
|
Up to ₹11,999: Nil,
₹12,000–₹17,999: ₹120,
₹18,000–₹29,999: ₹180,
₹30,000–₹44,999: ₹300,
₹45,000–₹59,999: ₹450,
₹60,000–₹74,999: ₹600,
₹75,000–₹99,999: ₹750,
₹1,00,000–₹1,24,999: ₹1,000,
Above ₹1,25,000: ₹1,250
|
31 August and 28 February
|
|
Madhya Pradesh
|
Monthly
|
Up to ₹18,750: Nil,
₹18,751–₹25,000: ₹125,
₹25,001–₹33,333: ₹166/₹174,
Above ₹33,334: ₹208/₹212
|
30 September or within 30 days of registration
|
|
Maharashtra
|
Monthly
|
Up to ₹7,500: Nil,
₹7,501–₹10,000: ₹175,
Above ₹10,001: ₹200/₹300*
|
By 30 June or within 30 days of enrollment
|
|
Manipur
|
Yearly
|
Up to ₹50,000: Nil,
₹50,001–₹75,000: ₹1,200,
₹75,001–₹1,00,000: ₹2,000,
₹1,00,001–₹1,25,000: ₹2,400,
Above ₹1,25,001: ₹2,500
|
By 30 March
|
|
Meghalaya
|
Monthly
|
Up to ₹4,166: Nil,
₹4,167–₹6,250: ₹16.50,
₹6,251–₹8,333: ₹25,
₹8,334–₹12,500: ₹41.50,
₹12,501–₹16,666: ₹62.50,
₹16,667–₹20,833: ₹83.33,
₹20,834–₹25,000: ₹104.16,
₹25,001–₹29,166: ₹125,
₹29,167–₹33,333: ₹150,
₹33,334–₹37,500: ₹175,
₹37,501–₹41,666: ₹200,
Above ₹41,667: ₹208
|
Before 28 of every month
|
|
Mizoram
|
Monthly
|
Up to ₹5,000: Nil,
₹5,001–₹8,000: ₹75,
₹8,001–₹10,000: ₹120,
₹10,001–₹12,000: ₹150,
₹12,001–₹15,000: ₹180,
Above ₹15,001: ₹208
|
Before 30 June annually
|
|
Nagaland
|
Monthly
|
Up to ₹4,000: Nil,
₹4,001–₹5,000: ₹35,
₹5,001–₹7,000: ₹75,
₹7,001–₹9,000: ₹110,
₹9,001–₹12,000: ₹180,
Above ₹12,001: ₹208
|
By 30 September or within one month of enrollment
|
|
Odisha
|
Monthly
|
Up to ₹1,59,999: Nil,
₹1,60,000–₹3,00,000: ₹125,
Above ₹3,00,000: ₹200/₹300*
|
By the end of the succeeding month
|
|
Puducherry
|
Every Six Months
|
Up to ₹99,999: Nil,
₹1,00,000–₹2,00,000: ₹250,
₹2,00,001–₹3,00,000: ₹500,
₹3,00,001–₹4,00,000: ₹750,
₹4,00,001–₹5,00,000: ₹1,000,
Above ₹5,00,000: ₹1,250
|
By 30 June and 31 December
|
|
Punjab
|
Monthly
|
Above ₹20,833: ₹200
|
By the last date of the following month
|
|
Sikkim
|
Monthly
|
Up to ₹20,000: Nil,
₹20,001–₹30,000: ₹125,
₹30,001–₹40,000: ₹150,
Above ₹40,001: ₹200
|
Quarterly: 31 July, 31 October, 31 January, 30 April
|
|
Tamil Nadu
|
Every Six Months
|
Up to ₹21,000: Nil,
₹21,001–₹30,000: ₹100,
₹30,001–₹45,000: ₹235,
₹45,001–₹60,000: ₹510,
₹60,001–₹75,000: ₹760,
Above ₹75,000: ₹1,095
|
30 September and 31 March
|
|
Telangana
|
Monthly
|
Up to ₹15,000: Nil,
₹15,001–₹20,000: ₹150,
Above ₹20,000: ₹200
|
By 30 June or within one month of enrollment
|
|
Tripura
|
Monthly
|
Up to ₹7,500: Nil,
₹7,501–₹15,000: ₹150,
Above ₹15,001: ₹208
|
By 30 September or within one month of enrollment
|
|
West Bengal
|
Monthly
|
Up to ₹10,000: Nil
₹10,001–₹15,000: ₹110
₹15,001–₹25,000: ₹130
₹25,001–₹40,000: ₹150
Above ₹40,001: ₹200
|
By 31 July
|
Due Dates for Professional Tax Payment:
- For employers with more than 20 employees: Payment is due within 15 days of the month’s end.
- For employers with less than 20 employees: Payment is due quarterly (by the 15th of the following month after the end of the quarter).
Penalties for Non-Compliance:
Failure to register for professional tax or delay in filing returns can lead to penalties, depending on state laws. For example, in Maharashtra, penalties can include:
- Rs. 5 per day for failing to register
- Rs. 1,000 for late filing of returns
Interest of 1.25% per month and a 10% penalty on delayed payments
Filing Professional Tax Returns:
The filing of professional tax returns is mandatory for all individuals and businesses subject to the tax. Filing deadlines differ by state.
Professional Tax Rates:
The maximum annual professional tax payable is INR 2,500. The rate of tax, however, varies across different states and is calculated based on the individual’s taxable income. Employers and professionals are required to pay either monthly or quarterly, depending on the number of employees or income levels.
Professional Tax Registration Certicate and Compliance:
To comply with state tax laws, professionals and employers must register for a Professional Tax Certificate within 30 days of starting their practice or employing staff. The application must be submitted to the respective state tax department.
Key Requirements:
- Application forms
- Required documents such as PAN card, company incorporation details, employee salary details, and more
- Separate applications for businesses with more than one place of work
Who Pays Professional Tax?
- Salaried employees: The employer is responsible for deducting and remitting the professional tax.
- Self-employed professionals: They must directly pay the tax to the state government.
Types of Professional Tax Certificates:
There are two main types of certificates:
- Professional Tax Enrollment Certificate (PTEC): For businesses (sole proprietors, partnerships, companies).
- Professional Tax Registration Certificate: For employers who deduct tax from employees' salaries and remit it to the government.
Employer's Responsibility for Professional Tax:
Employers have key responsibilities when it comes to Professional Tax:
- Registration: Employers must register themselves and their employees with the tax authorities.
- Tax Deduction: Employers must deduct the applicable tax from employees' salaries and remit it to the state.
- Timely Payment: Employers should ensure timely payment of the deducted taxes to avoid penalties.
- Record-Keeping: Employers must maintain accurate records of tax deductions and payments.
- Compliance: Employers must stay updated on changes to tax laws and ensure timely filing of returns.
Exemption From Professional Tax:
Certain individuals are exempt from paying professional tax under the law, including:
- Parents of children with permanent disabilities
- Members of the armed forces
- Individuals with permanent physical disabilities
- Women working as agents under the Mahila Pradhan Kshetriya Bachat Yojana
- Senior citizens above 65 years of age
At FilingIn, we make Professional Tax registration a hassle-free process. Our team of experts helps you navigate the complex tax regulations, ensuring compliance and reducing your stress. Here’s why you should choose us:
- Expert Guidance: Get personalized advice from our team of experts, ensuring that your registration aligns with the latest regulations.
- Application Handling: We manage the submission of your application to the relevant authorities.
- Timely Processing: We expedite the process, helping you obtain your registration certificate without delays.
- Compliance Assurance: With FilingIn, you can be confident that you are fully compliant with state-specific tax laws.
Trust FilingIn to handle all your professional tax needs seamlessly.
Frequently Asked Questions in India
What is Professional Tax?
Professional Tax is a tax levied by state governments in India on individuals earning an income through professions, trades, employment, or callings. It is applicable to salaried employees, self-employed professionals, and businesses.
Who is liable to pay Professional Tax?
Individuals engaged in salaried employment, professionals (like doctors, lawyers, chartered accountants), businesses, and companies are liable to pay professional tax based on their income or number of employees.
What is the maximum amount of Professional Tax payable?
The maximum amount of Professional Tax that can be charged per year is INR 2,500, but the actual amount may vary based on income and the state in which the individual or business is located.
Which states in India levy Professional Tax?
Not all states in India levy Professional Tax. States like Maharashtra, Karnataka, West Bengal, Gujarat, and Tamil Nadu enforce it, while states like Delhi, Goa, Jammu & Kashmir, and Uttar Pradesh do not.
Do employers need to pay Professional Tax for their employees?
Yes, employers are responsible for deducting professional tax from employees’ salaries and paying the amount to the state government. Employers must also file returns to the tax department.
Can self-employed professionals pay their own Professional Tax?
Yes, self-employed professionals like doctors, lawyers, and consultants are required to pay professional tax directly to the state government.
How do I register for Professional Tax?
To register for Professional Tax, businesses or self-employed individuals need to apply to the respective state’s tax department by submitting the necessary documents and forms. Registration should be completed within 30 days of starting a business or employing staff.
What documents are required for Professional Tax registration?
Documents required include:
- Certificate of Incorporation or LLP Agreement
- PAN Card of the company or business owner
- Address proof and identity proof of the business owner/director
- NOC from the landlord
- Employee details and salary information
What is the due date for Professional Tax payment?
For businesses with more than 20 employees, payment is due within 15 days from the end of the month. For businesses with fewer than 20 employees, payment is due quarterly, by the 15th of the month following the quarter.
How do I file Professional Tax returns?
Professional Tax returns must be filed annually or quarterly, depending on the state and the number of employees. The return should include the details of tax payments made, and penalties may apply for late filing.
Are there any exemptions from paying Professional Tax?
Yes, certain individuals such as senior citizens above 65 years, individuals with permanent disabilities, members of the armed forces, and women working under specific government schemes are exempt from paying Professional Tax.
Can Professional Tax be paid annually?
Yes, in most cases, Professional Tax can be paid annually or quarterly, depending on the state’s regulations. Businesses with fewer than 20 employees may opt for annual payment.
What happens if I fail to register for Professional Tax?
Failure to register for Professional Tax can result in penalties. States may charge fines or interest on delayed payments and late filings of returns. Penalties may also include imprisonment in extreme cases.
Can I claim a deduction for Professional Tax paid?
Yes, Professional Tax paid can be claimed as a deduction under section 16 of the Income Tax Act, reducing the taxable income for individuals and businesses.
What is the penalty for late payment of Professional Tax?
Penalties for late payment vary by state but often include interest on the overdue amount and a penalty percentage. For example, in Maharashtra, there is a penalty of 10% for late payments and Rs. 1,000 for late returns.
