Professional Tax Registration

Unlike its name, professional tax is not just applicable to professionals but it is levied on all kinds of trades, employment, freelancers, and professionals.

Professional tax is deductible from taxable income under section 16(iii) of the Income Tax Act 1961, and tax rates vary in different states of India and follow a slab system. The Commercial Tax Department collects professional tax and reaches the fund of the municipal corporation. However, professional tax is not applied in some states.

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What are the types of professional tax certificates?

There are two types of professional tax certificates-

• Professional Tax Enrollment Certificate (PTEC):
  It applies to owners of business entities, i.e., public and private companies, sole proprietors, partnership firms, and professionals.
• Professional Tax Registration Certificate (PTRC):
  It applies to government/ non-government employers, and they deduct the tax from the employee's salary and pay it to the government.

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Who is liable to pay professional taxes?

• Individuals carrying freelance business without employees must register if the income exceeds the threshold provided by the state’s legislation.
• Owners of sole proprietorships, corporates, and partnership firms are required to pay tax on their trade and profession if income exceeds the threshold. Employers must register for professional tax registration and obtain the certificate of professional tax registration certificate.
• An employer is liable to deduct the tax from their employee's salary and deposit it to the state government, and it is also subject to the monetary threshold.

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Who is responsible for collecting professional tax?

The Commercial Tax Department collects professional tax. The commercial tax department of the respective states collects it, ultimately reaching the municipal corporation's fund.

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What are the Exemptions in professional tax?

• Any person having a mental or physical disability
• Parents of a child with a disability
• Temporary factory workers
• State-employed foreign individual
• Any individual aged 65 years or older
• Individuals running educational institutions
• Employees of force (Governed by Army, Air Force, Navy Act)

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Professional Tax Rates in Different States of India

Every state has laws and regulations different from any other state, Professional tax rates are also different in different states.

Professional tax slab for few states

The professional tax rate on salary in Gujarat

The professional tax rate on salary in Andhra Pradesh

The professional tax rate on salary in Bihar

The professional tax rate in Karnataka

The professional tax rate in Kerala

Online Professional Tax Registration in India

Professional tax registration online process varies in different states of India. Employers need to check with state commercial departments' websites to know more about tax slabs and online professional tax registration in India.

procedure for professional tax registration in India may be similar in different states. Payers can register themselves at the local commercial department of the state government.

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