Overview of professional tax
You will notice a small deduction on your payslip along with the HRA, conveyance, and basic salary breakdowns if you ever look over your payslips. Professional tax is a deduction that generally runs to the tune of around INR 200 or so. This tax is generally different for each state, and in certain places, it may not be possible to make any deductions under this category. So what is professional tax?
How does Professional Tax work?
The respective state governments impose pay professional tax in India on income earned by the profession or employment. Lawyers, teachers, doctors, chartered accountants, and others who earn income from salary or other practices must pay professional tax. The professional tax is deducted by the employer from salary and wages for salaried and wage earners, and the same is deposited with the state government. The employee’s responsibility is to pay this tax, which varies from state to state. The maximum amount collected per year is INR 2500/-.
Registration and filing of professional tax returns
Generally, professional tax registration is required within 30 days of hiring staff or, for professionals, within 30 days of starting a practice. In order to obtain a Registration Certificate, the assessee should apply to his state tax department within 30 days after employing staff for his business. Professional tax must be deducted from his salary or wages. The assessee should apply separately to each authority with respect to the places of work under its jurisdiction if he has more than one place of work.
Generally, if an employer employs more than 20 employees, he must pay within 15 days of the end of the month. However, if he employs less than 20 employees, he must pay quarterly (i.e. by the 15th of the month following the end of each quarter).
Deduction of professional taxes is the responsibility of whom?
As a result of deducting professional tax from employee salaries, employers must pay the appropriate state government the collected amount. Tax returns must be submitted by employers to the tax department within the specified timeframe along with proof of payment of taxes.
Explore Professional Tax Registration online
1. Professional Tax is payable by who as an ’employer’?
In accordance with the Profession Tax Act, every employer is liable to deduct and pay profession tax (as per the Schedule to the Profession Tax Act).
2. Who is required to obtain a Certificate of Registration (RC)?
A Certificate of Registration is required for any employer who pays salary/wages within the taxable limit to his employees and is responsible for paying Profession Tax on their behalf.
3. What is the maximum amount of Professional Tax to be paid?
The maximum amount payable each year towards professional taxes is * 2,500. The professional taxes are usually calculated on the gross income of the professional and are deducted from each employee’s monthly income.
Read more,
- What Is The Procedure Of Professional Tax Registration?
- How To Pay Professional Tax Online In Tamilnadu?
- The professional Tax Registration Process