PROFESSIONAL TAX

Professional tax is a deductible amount that can be deducted from taxable income in accordance with the Income Tax Act, 1961. It is a state-level tax levied by state governments and collected by the Commercial Tax Department. It is applicable to all salaried employees, working professionals as well as self-employed individuals. The tax rates vary from state to state and are based on the individual’s profession, trade or employment. The professional tax registration is the responsibility of every business or trade owner who is also required to fulfil the duty of deducting professional tax from every staff member and pay for the same to the concerned authority.

Professional tax regulations are easy to comply with and the procedures can be completed quickly. But you need to understand some points in detail. Since the regulations vary according to states, if you have employees from different states working under you, you will need to get a registration for all states. You also need to know the rules of the respective states when filing for a return. It is a judicial requirement of the country to pay professional tax and employers in respective states are bound to obtain professional tax registration. Avoiding professional tax registration can cost you penalties.

Business firms, corporations, LLPs, clubs and societies, companies, and other organizations will be considered a taxable entity when applying for professional tax registration. The employers should deduct professional tax from the salary of employed people under them and submit it during filing returns at the professional tax department. The Directors and Partners of a company, firm, and LLP should also pay professional tax. Individual people such as legal practitioners, medical practitioners, consultants, secretaries, surveyors, chartered accountants, engineers, contractors, architects, and insurance agents are also considered as professionals who require paying professional tax.