Comprehensive Guide on Professional Tax Registration and Compliance in India

1. Introduction to Professional Tax in India

Professional Tax is a state-imposed indirect tax on income earned through salaries or professional fees. It applies to salaried employees, self-employed professionals like Chartered Accountants, Company Secretaries, Lawyers, Doctors, Engineers, Architects, and other business entities. This tax is regulated and collected by State Governments in India under respective state laws.

2. States Imposing Professional Tax

Currently, 18 States in India levy and collect Professional Tax:

• Punjab
• Uttar Pradesh
• Karnataka
• Bihar
• West Bengal
• Andhra Pradesh
• Telangana
• Maharashtra
• Tamil Nadu
• Gujarat
• Assam
• Kerala
• Meghalaya
• Odisha
• Tripura
• Madhya Pradesh
• Jharkhand
• Sikkim

3. Professional Tax Registration

3.1 Types of Professional Tax Registration

1. Professional Tax Registration Certificate (PTRC): Required for businesses deducting professional tax from employees’ salaries.
2. Professional Tax Enrolment Certificate (PTEC): Required for self-employed individuals paying professional tax on their income.

3.2 Who Needs to Register?

• Employers deducting professional tax from employees and depositing it with the respective state authority.
• Self-employed professionals liable to pay professional tax on their earnings.
• Businesses with multiple locations must obtain separate registrations in each state where they operate.

4. Professional Tax Slab Rates

The tax rates vary across states. However, the maximum annual professional tax cannot exceed INR 2,500.

State	Monthly Salary Slab	Professional Tax
Maharashtra	Up to INR 7,500	Nil
	INR 7,501 – 10,000	INR 175
	Above INR 10,000	INR 200 (INR 300 for Feb)
Karnataka	Up to INR 15,000	Nil
	Above INR 15,000	INR 200
West Bengal	Up to INR 10,000	Nil
	INR 10,001 – 15,000	INR 110
	INR 15,001 – 25,000	INR 130
	Above INR 25,000	INR 200

 

5. Professional Tax Compliance and Filing

• Monthly Payment: Employers must deduct professional tax from salaries and deposit it by the 15th of the following month.
• Annual Returns: In some states, businesses need to file annual returns in addition to monthly payments.
• Composition Scheme: Some states allow lump sum payments to simplify compliance for small businesses.

6. Exemptions from Professional Tax

Certain individuals and organizations are exempt from paying professional tax. Exemptions vary by state but commonly include:

• Individuals above 65 years of age
• Persons with physical disabilities
• Parents/guardians of children with permanent disabilities
• Members of the Armed Forces
• Women working under Mahila Pradhan Kshetriya Bachat Yojana

7. Deduction of Professional Tax in Income Tax

• Professional tax paid by employees is deductible under Section 16(iii) of the Income Tax Act, 1961.
• Employers can claim the amount paid on behalf of employees as a business expense.

8. Documents Required for Professional Tax Registration

1. PAN Card of the company, firm, or proprietor
2. Address Proof (Utility bill, Lease Agreement, No Objection Certificate)
3. Certificate of Incorporation (for companies) or Partnership Deed (for partnerships)
4. Bank Account Details with a canceled cheque
5. Passport-size photograph of the applicant or authorized signatory
6. Shop and Establishment Registration Certificate (if applicable)
7. Salary and Attendance Register (for employers)

9. How to Apply for Professional Tax Registration

1. Visit the respective state government portal
2. Fill out the online application form
3. Upload required documents
4. Pay the applicable registration fees
5. Receive the registration certificate after verification

10. Non-Compliance and Penalties

Failure to comply with professional tax regulations can lead to:

• Late payment penalties (ranging from INR 5 to INR 50 per day)
• Interest on unpaid tax (usually 1.25% per month)
• Additional penalties for failure to obtain registration

 

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11. Additional Resources

For further reading, explore the following topics:

• GST Registration and Compliance in India.
• Income Tax Return – Types and purpose of Income Tax return filings.
• Payroll Compliance Services offered by Return Filings.
• RCMC Registration: Process, Eligibility, Benefits, and Required Documents.

Frequently Asked Questions (FAQs) on Professional Tax Registration and Compliance in India

A. General Information about Professional Tax

1. What is Professional Tax?

Professional tax is a tax levied by state governments on individuals and professionals earning income within their jurisdiction. It’s a form of direct tax.

2. Why is Professional Tax levied?

Professional tax is a source of revenue for state governments, used to fund various development and welfare programs.

3. Who is liable to pay Professional Tax?

Salaried individuals, professionals (doctors, lawyers, chartered accountants, etc.), self-employed individuals, and businesses (including companies, partnerships, and proprietorships) are liable to pay professional tax if they fall within the income slabs defined by the respective state governments.

4. Is Professional Tax a Central or State tax?

Professional tax is a state tax. Each state has its own rules, rates, and regulations.

B. Registration Process and Requirements

5. Where do I register for Professional Tax?

You register for professional tax with the professional tax department or the municipal corporation/local authority of the state where you are employed or where your business is located.

6. What is the process for Professional Tax registration?

The process varies by state but generally involves:

6. • Obtaining the application form (online or offline).
   • Filling out the form with accurate details.
   • Submitting the required documents.
   • Paying the registration fee.
   • Obtaining the registration certificate.
7. What documents are required for Professional Tax registration?

Document requirements vary by state but commonly include:

7. • Proof of identity (Aadhaar, PAN card, etc.).
   • Proof of address.
   • Business registration documents (if applicable).
   • Details of employees (if applicable).
   • Professional qualification certificates (for professionals).
8. Is there any fee for Professional Tax registration?

Yes, there is a registration fee, and it varies by state.

9. How long does it take to get Professional Tax registration?

The processing time varies by state and the completeness of the application.

C. Payment and Compliance

10. How often do I need to pay Professional Tax?

The frequency of payment (monthly, quarterly, annually) varies by state.

11. How do I pay Professional Tax?

Payment methods vary by state and can include online payment portals, bank drafts, or payments at designated offices.

12. What are the penalties for late payment of Professional Tax?

Late payment attracts penalties, which also vary by state.

13. Do I need to file any returns for Professional Tax?

Yes, most states require the filing of periodic returns (usually annually) even if the tax has been deducted from salary.

14. What are the compliance requirements for Professional Tax?

Compliance includes:

14. • Timely registration.
    • Regular payment of tax.
    • Filing of returns.
    • Maintaining proper records.

D. Other Aspects

15. Can I have multiple Professional Tax registrations?

Generally, no. You should have only one registration in the state where you are working or conducting business.

16. What if I change my job or business location?

You will need to inform the relevant professional tax authorities and potentially register in the new state if required.

17. Are there any exemptions from Professional Tax?

Some categories of individuals or institutions may be exempt from professional tax.

E. Other generally asked questions related to Professional Tax registration and compliance:

           18.   How do I register for professional tax in my state?

            Application shall be made to respective state’s professional tax department or municipal corporation.

19. What is the professional tax rate in my state?

Check the state’s professional tax rules.

20. What are the due dates for professional tax payment?

Vary by state.

21. What are the penalties for late payment of professional tax?

Vary by state.

22. Do I need to file a professional tax return?

Yes, in most states.

23. Who is exempt from professional tax?

Check the state’s regulations.

24. Where can I find the professional tax application form?

At the state’s professional tax office or their website.

25. What is the full form of PT?

Professional Tax.