What is Professional Tax (PT)?

Professional Tax (PT) – it is a tax charged by the state government. Levied on all persons who are earning in one or another way eg: salary, within the state. However, not all states impose such tax

Below is the list of States which levy Professional Tax (PT)

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

Eligibility for Professional Tax (PT) levy?

The limits and rates are different for different states in India, but the amount of professional tax is capped to Rs 2,500 all over.

Category of the entity on which PT is applicable:

1. Companies
2. Corporations
3. Other corporate bodies
4. Firms
5. Hindu undivided family
6. Any club or association
7. Any society

Professional tax slab rate Example (for Karnataka):

For Maharashtra:  if the business is having any employee whose monthly salary is above Rs. 7500/- is also required to obtain Profession Tax Registration Certificate (PTRC) and pay tax after deducting the same from the employee’s salary as per the provisions of law.
 

Difference between Enrolment and registration in Professional Tax :

 Certificate of enrolment is given to companies or businesses for doing business in the certain state even in case there is no employee engaged for the business activity – this concept may differ from state to state. For eg: In Karnataka, every company must obtain such a certificate and pay tax annually by 30th April.

 PT registration is for companies whose employees have to pay tax on profession, as it is the responsibility of employers to pay on behalf of employees, they must obtain this registration and file monthly return and pay tax so collected on or before the due date as prescribed.

How to register?

 Must register within 30 days of employing any employees into the organisation

 Go to online PT website of the respective state

 Click on New registration, fill in all the details, OTPs to verify

 Upload the scanned documents (list mentioned below)

 Click on submit, then an acknowledgment Number will be generated – this will be used further for generation of Certificate

Documents required for registration

 Copy of PAN, MOA/AOA, and declaration from company or any other

 Copy of ID proof, Address proof of proprietor, all partners, all directors, or all members

 Address proof or sale deed of premises if owned or rental agreement

 PT authorisation letter

 Passport Size Photo of applicant authorised by company to apply for PT registration

Important Points to be noted

 It usually takes up to 3-5 days to get a certificate and need to apply for a login ID and password to PT office physically, along with all documents and authorization letter for collecting such ID & password – as per workings of Karnataka state

 The time varies from state to state for availing the PT registration

 Rates, salary range, PT enrolment, Registration fees, to some level further documents may differ from state to state including getting such registration number.

 The due date for monthly filing of return may differ from state to state, but the monthly return must be filed by registered people in all states.

 Penalty and Interest may differ from state to state

The Following is the procedure for registration of PTRC and PTEC certificate (in Maharashtra):

1. Go to https://www.mahagst.gov.in/en

2. Under the Other act and registration tab Select: New Dealer Registration

3. Now select New registration under various acts (for new dealers) TAB Detailed guidelines regarding application process flow, list of required documents are provided in the instruction sheet.

4. Click “next” a checkbox will appear to select the “New dealer” Checkbox and then click on next button  “PAN/TAN Validation” information page will appear

5. Fill the PAN no enter captcha and proceed further

6. After that “Temporary Profile creation,” page will appear. To create a Temporary profile by giving valid PAN, e-mail Id, and mobile number. After successful creation of a temporary profile, it will valid till 90 days for applying the online registration with PAN is user-id and password

7. The applicant will log in by using credentials as a temporary profile. After a successful login, the Dealer will select the “Existing Users” option from the menu option. After that “Act selection,” page will appear for which type of Act registration is required. In this page, dealer can select multiple Acts for registration in a single application.

8. Select the PTRC/PTEC Act from the checkboxes provided in the field “Acts for Registration”.

9. E-application (Form I/II) under the Professional Act will open.

10. Information in the form should be completely filled either by entering in the relevant fields or selecting from the drop-down lists.

11. Fields marked with '*' are mandatory fields.

12. PAN/TAN is a mandatory requirement before applying for registration

13. The selection of the constitution in the form should be as per the PAN.

14. In case, a dealer has opted for all Acts then the forms will be displayed in the sequence MVAT, CST, Luxury, PTRC, SCPT, ET and lastly PTEC.

15. Once the displayed form is filled completely and submitted, the data of unified fields of other forms will be needed to entered/selected by the applicant across all such forms.

16. The online application form will not be accepted if it is not complete in all respects and the required documents are not submitted along with the application.

17. In case the data in any of the fields is not entered, then the applicant would get error message and would be prompted to enter the said data.

18. All communication will be made on the email Id and mobile given in the temporary profile.

19. The applicant should select the ‘Status of the signatory” to the application and provide relevant details. Depending upon the constitution of the dealer, the application should be signed:

20. The signatory, manager/authorized person(s) are required to sign digitally or by uploading the signature at relevant place/places while filing the application and submit the relevant documents.

21. After filing the application Form, click on “Submit” button. After successful submission of Form, an acknowledgment bearing “Application Reference Number” will be available for download on confirmation page. The submitted application form which will be communicated via e-mail as attached PDF Format.

22. The MSTD portal shall carry out preliminary verification/validation, including real-time PAN validation with NSDL portal, Aadhaar No. validation with UIDAI portal, IGR details with IGR portal and Electricity bill utilities with respective service providers such as Tata Power, MSEB, BEST, Reliance Energy and Toronto and issuance of TIN by MSTD Department through inter-portal connectivity before submission of the application form

Exemptions from Professional Tax (in Maharashtra) :

• The person has completed the age of 65 years (w.e.f 1.04.1995)
• For salary/wages up to Rs 10,000 pm in case of female employees is exempted (w.e.f 1.4.2015).
• Under the Mahila Pradhan Kshetriya Bachat Yojana of Directorate of Small Savings women exclusively engaged as agents.
• Mathadi Kamgar (casual workers) ( Cir. 12T dated 3.08.2011).
• In the textile industry Badli workers.
• Members of armed forces of Union serving in the state.
• Any person and parents or guardians of such persons who is suffering from mental retardation specified in the rules and certified by a psychiatrist working in a government hospital.
• Partnership firms and HUF.
• Any person suffering from a permanent physical disability (including blindness) specified in the rules, certified by a physician, a surgeon or an oculist, working in a Government hospital, which has the effect of reducing considerably such individual’s capacity for normal working or engaging in a gainful employment or occupation and also his parents or guardians.
• Parents and guardians of a child suffering from a physical disability mentioned in the above point (9).
• Armed members of Central Reserve Police Force to whom the Central Reserve Police Force to whom the Central Reserve Police Force Act, 1949 applies and the armed members of Border Security Force to whom the Border Security Force Act, 1968 applies serving in the State of Maharashtra.
• Up to one year of standing in the profession, professionals like Chartered Accountants, Medical Practitioners, Tax Consultants, Legal Practitioners and etc are not liable.

Exemptions from Professional Tax (in Karnataka) :

• All charitable and philanthropic hospitals or nursing homes situated in places below the taluk level in all districts of the State except Bangalore and Bangalore Rural District.
• Directors of Companies registered in Karnataka and nominated by the financing agencies owned or controlled by the State Government or by other statutory bodies.
• Foreign technicians employed in the State provided their appointments are approved by the Government of India for the purpose of exemption from payment of income tax for the said period (the exemption is for a period of 2 years from the date of their joining duty).
• Combatant and civilian non-combatant members of the Armed Forces who are governed by the Army Act, the Navy Act, and the Air Force Act.
• Salaried or wage-earning blind persons.
• Salaried or wage-earning deaf and dumb persons
• Holders of permits of single taxi or single three-wheeler goods vehicle.
• Institutes teaching Kannada or English Shorthand or Typewriting.
• A Physically handicapped person not less than 40% of permanent disability (subject to production of a certificate from the HOD of Government Civil Hospital).
• An ex-serviceman not falling under Sl No.1 of the Schedule.
• A person having a single child and who has undergone sterilization operation, subject to production of a certificate from the District Surgeon, Government Civil Hospital, for having undergone such operation.
• Central Para Military Force (CPMF) Personnel.
• Persons running educational institutions in respect of their branches teaching classes up to twelfth standard or pre-University Education.
• Professional Tax - Employee

Compliance for Professional Tax (PT)

(1) Yearly Employer Tax Payment

Every registered business with Enrollment Certificate shall pay tax every year before 30th of April at the specified rates.

(2) Monthly Return and Payment of Tax

Amount of Profession Tax (PT) to be deducted on employees where Salary of an employee is Rs.15000 or more is Rs.200 per month.

Every employer those who have obtained the Certificate of Registration shall file a return within twenty days of the expiry of every month showing the salary and wages paid by him and the amount of tax deducted by him in respect of employees during the preceding month.

Payment of Tax shall also be done along with the filing of Return electronically. Non-filing of return or non-payment of tax in time shall attract a penalty of Rs.250.00 (Rupees Two Hundred and Fifty every month).

(3) Yearly Return.

Every employer shall file a yearly return within sixty days of the expiry of the year, showing the salaries and wages paid by him and the amount of tax deducted by him during the preceding year

Effect of Non-Registration / Non-Filing of Returns / Non-Payment of Tax (Karnataka)

If an employer fails to get the Certificate of Enrolment (EC), or to obtain the Certificate of Registration (RC) or fails to file any return in time, the assessing authority under Karnataka Professional Tax Act shall order the amount of tax to be paid by an employer and impose a penalty for non-payment tax and non-filing of returns that are due from an employer.

(1) Employer Registration:

If the employer fails to obtain the Certificate of Enrollment in time, the same shall attract a penalty of Rs.1,000/- and the yearly taxes that are pending to be paid from the date of commencement of business also has been paid.

(2) Employee Registration:

If the employer fails to obtain the Certificate of Registration (RC) in time and fails to deduct and pay the professional Tax on behalf of the employees, the employer shall be liable to pay the tax that should have been deducted from the employees from the date of start of employment to the date of obtaining the registration with simple interest at 1.25% for each month or part thereof and it will also attract a penalty equal to the amount tax to be paid till the date of payment.

(3) Non-Payment of Tax:

If the employer fails to make the payment of tax in time, the same shall attract simple interest at 1.25% for each month or part thereof. In addition to the interest, the professional Tax Officer may impose an additional amount not exceeding fifty percent of the amount of tax due to a penalty a well.

(4) Non-Filing of Return:

If the employer fails to file, the monthly return with the 20th of next month, the time shall attract a penalty of Rs.250.00 every month.