What is Professional Tax? Rates, Due Dates

What is Professional Tax?

Professional Tax is a tax on all kinds of professionals, whether self-employed, salaried, or into trading; this tax is levied on employees carrying on the business, including professionals, freelancers, etc, subject to income exceeding the monetary threshold if any. The professional tax rate varies from one state of the country to another, and there are also various states which do not have any Professional Tax. This tax implication completely depends on the state government.

Professional Tax Rates in Different States

Professional Tax is levied by the State Government on the income of the assessee. Under Article 276 of the Indian Constitution, the state governments are empowered to decide the rate for the professional tax in the state. The cap limit to levy professional tax is Rs 2500 beyond which professional tax cannot be charged to any person.

Every state has its own slabs for this tax, and here is a glimpse of the same –

Please Note: For the month of February, the Professional Tax is a little higher than the rest of the eleven months in the year.

Who pays Professional Tax?

If you are in the salaried profession, you have to pay professional Tax; if you are self-employed, you pay this tax; if you are a Doctor, Engineer, or Chartered accountant – Professionals, and you have to pay this tax. If you are running a business that is your source of income, you have to pay this tax. So, if your income crosses the threshold mentioned by the states, you are liable to pay the professional tax.

Who Collects Professional Tax?

For a salaried employee, the employer collects the tax from the employee by deducting the same from the salary. Then, it is deposited with the Commercial Tax Department. The Commercial Tax Department collects all the Professional Tax in the states where it is applicable, and then the fund is sent to the municipal corporation.

How to pay professional tax

The payment procedure of the Professional Tax varies according to the state again. Each state government has its own website, and you can pay the tax online. Here are different ways you can do it.

• You can use the Profession Tax Enrolment Number 12 Digit (numeric), to pay the tax.
• You can also do it by using your Tax Registration Number
• Tax Government ID of 12 digit
• Vat Number

After you submit the details and process the payment, you can check the status of your payment as well on the website.

Penalties for violating Professional Tax regulation

The penalties for not registering for Professional Tax or not paying the same within the due date every month vary depending on the policies of each state. However, generally, for non-registration, a penalty of Rs. 5 per day is levied. If you pay after the due date, you are charged 10% extra on professional tax as a penalty.

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