PROFESSIONAL TAX REGISTRATION

Professional tax is a state-level tax levied on individuals earning income through employment, trade, profession, or calling. Unlike income tax, which is collected by the Central Government, professional tax is imposed by the respective state or union territory. For salaried individuals, the employer deducts professional tax from their salary and deposits it with the state government. In other cases, individuals must directly pay the tax. The amount and calculation of professional tax vary across states, but it is capped at a maximum of Rs. 2,500 per year.

Applicability of Professional Tax

Professional tax applies to:

  • Individuals: Those earning income through employment, profession, or trade.
  • Hindu Undivided Families (HUF): Applicable to family businesses.
  • Companies, Firms, Co-operatives, and Associations: Whether incorporated or not, these entities are liable to pay professional tax.
  • Professionals: Such as lawyers, teachers, doctors, chartered accountants, and other salaried or self-employed professionals.

Employer’s Responsibility

Employers must deduct the professional tax from employees' salaries and submit the payment to the state government within the prescribed time. Failure to provide proof of payment with the tax return can invalidate the submission.

Exemptions

Exemptions apply to certain individuals, including:

  • Parents of children with permanent disabilities
  • Armed forces members
  • Textile industry workers
  • Individuals with physical disabilities (including blindness)
  • Women agents under specific government schemes
  • Individuals over 65 years of age

Registration and Compliance

Professionals must register for professional tax within 30 days of employing staff or starting their business. If a business operates in multiple locations, separate applications are required for each jurisdiction.

Payment Deadlines

  • Employers with over 20 employees: Payment is due within 15 days of the month’s end.
  • Employers with fewer than 20 employees: Payment is due quarterly by the 15th of the month following the quarter's end.

Professional Tax Return

All individuals liable for professional tax must file a return as per the state's due dates, which vary by location.