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What Is Professional Tax

What Is Professional Tax Professional tax is an important aspect of taxation that often goes unnoticed or misunderstood by Many salaried personnel is probably very well privy to the term ‘professional tax’ as it would have been mentioned inside the Salaries slip /Form 16 issued to them. But they all may also or might not understand what it is and why it’s far acting in their Salaries slips/Form16 as a deduction from their profits. What Is Professional As a result, this article is an attempt to offer a higher photograph of what and why expert tax is deducted and whether or not the salaried class humans are handiest bearing it.

What is a Professional tax, and who levies it?
What Is Professional Tax
What Is Professional Tax

 

The ‘professional tax’ may be one of those phrases which do not now absolutely bring the actual meaning of the term. Unlike the name indicates, it’s miles just now not the tax levied only on professionals. 

Professional tax is a tax on all kinds of professions, trades, and employment and is levied primarily based on the profits of such profession, exchange and employment. What Is Professional Tax It is levied on personnel, a person wearing on the enterprise, which includes freelancers, experts, and many others., concern to profits exceeding the financial threshold if any.

As per article 246 of the constitution of India, only the parliament has the one-of-a-kind energy to make laws with admiration to the union listing, which incorporates taxes on income. What Is Professional Tax The country has the energy to make laws most effective with respect to the concurrent and state listing.

It can be cited that professional tax is a deductible quantity for the cause of the earnings-tax act  1961 and can be deducted from taxable profits.

Professional Tax Rate

The professional tax rates vary across states in India, as each state government has its own regulations governing this tax. Typically, professional tax is imposed based on income slabs, with higher earners subject to higher tax rates.

Article 276 of the Constitution grants state governments the authority to levy professional tax, with a maximum set at Rs 2,500. What Is Professional Tax This means that no individual can be charged more than Rs 2,500 as professional tax, regardless of their income level.

What Is Professional Tax Professional tax is a state-level tax levied on professionals and salaried individuals by the state government in India. The rate of professional tax varies from state to state, and it is usually a slab-based system depending on the individual’s income. What Is Professional For instance, the monthly professional tax rate might range from a few hundred rupees for lower income brackets to a higher amount for those in higher income brackets. What Is Professional Tax  Employers are responsible for deducting professional tax from their employees’ salaries and remitting it to the state government.

Professional Tax Rate, state-level tax, salaried individuals, income brackets, slab-based system, India, employers, state government, deduction, remittance.

 

The professional tax rate slab for Karnataka in a table format:
Monthly Salary/Wage Professional Tax Rate
Up to Rs 25,000 NIL
Above Rs 25,000 Rs 200 per month

The professional tax rate slab for Maharashtra presented in a table format:

Monthly Salary/Wage Professional Tax Rate
Up to Rs 7,500 (Men) Nil
Up to Rs 25,000 (Women) Nil
Rs 7,501 – Rs 10,000 Rs 175
Above Rs 10,000 Rs 200 (Rs 300 for February)

The professional tax rate slab for West Bengal presented in a table format:

Monthly Salary/Wage Professional Tax Rate
Up to Rs 10,000 Nil
Rs 10,001 – Rs 15,000 Rs 110
Rs 15,001 – Rs 25,000 Rs 130
Rs 25,001 – Rs 40,000 Rs 150
Above Rs 40,000 Rs 200

The professional tax rate slab for Telangana presented in a table format:

Monthly Salary/Wage Professional Tax Rate
Up to Rs 15,000 Nil
Rs 15,001 – Rs 20,000 Rs 150 per month
Above Rs 20,000 Rs 200 per month

The professional tax rate slab for Kerala presented in a table format:

Monthly Salary/Wage Professional Tax Rate
Up to Rs 1,999 Nil
Rs 2,000 – Rs 2,999 Rs 20
Rs 3,000 – Rs 4,999 Rs 30
Rs 5,000 – Rs 7,499 Rs 50
Rs 7,500 – Rs 9,999 Rs 75
Rs 10,000 – Rs 12,499 Rs 100
Rs 12,500 – Rs 16,666 Rs 125
Rs 16,667 – Rs 20,833 Rs 166
Above Rs 20,834 Rs 208

The professional tax rate slab for Tamil Nadu presented in a table format:

Monthly Salary/Wage Professional Tax Rate
Up to Rs 3,500 Nil
Rs 3,501 – Rs 5,000 Rs 22.5
Rs 5,001 – Rs 7,500 Rs 52.5
Rs 7,501 – Rs 10,000 Rs 115
Rs 10,001 – Rs 12,500 Rs 171
Above Rs 12,500 Rs 208

 

The responsibility for collecting professional tax lies with the Commercial Tax Department of each state. What Is Professional This tax collection agency ensures that professional tax payments are collected from eligible individuals and entities, with the collected funds typically allocated to the municipal corporation for various public service initiatives.

Who is Available to Pay Professional Taxes?

Professional tax is levied on individuals earning an income through employment, profession, trade, or other means. What Is Professional Tax This includes salaried employees, self-employed professionals such as doctors, lawyers, and accountants, as well as freelancers and business owners. What Is Professional The responsibility to pay professional tax rests with both employers, who deduct it from their employees’ salaries, and individuals who must pay it directly if they are self-employed. The specific eligibility criteria and rates vary by state in India.

  • Employers, including corporates, partnership firms, sole proprietorships, etc., are responsible for deducting and remitting professional tax What Is Professional Tax for their employees to the state government. What Is Professional Tax They must obtain both a professional tax registration certificate to pay tax on their trade/profession and a professional tax enrollment certificate to deduct tax from their employees’ salaries.

 

  • Additionally, employers may need separate registrations for each office, depending on state legislation. Freelancers conducting business without employees must also register themselves, subject to any monetary thresholds set by the state.

 

  • However, certain categories may be exempt from professional tax, as determined by state laws. What Is Professional Tax For instance, in Karnataka, parents or guardians of mentally retarded or blind individuals are among those exempt from the professional tax levy.

How to Pay Professional Tax? Is Any Return to be Filed?

To pay professional tax, employers must register with the respective state tax department and obtain a professional tax registration certificate. Employers then deduct the tax from employees’ salaries and remit it to the state government. What Is Professional Self-employed individuals must register and pay the tax directly to the tax authority. What Is Professional Tax Payment can typically be made online through the state tax department’s website. What Is Professional Tax Depending on the state’s regulations, periodic returns may need to be filed, detailing the amount of tax deducted and paid.

Professional tax payment methods vary by state, but it can typically be paid both online and offline. To pay professional tax, visit the official website www.mahagst.gov.in of your state government.

If you’re a salaried individual, your employer is responsible for collecting and remitting professional tax on your behalf.

 

Exemptions in Professional Tax

 

Certain categories of individuals are exempt from paying professional tax, including:

  1. Members of the Armed Forces governed by the Army, Air Force, or Navy Act.
  2. Persons with mental or physical disabilities, including but not limited to blindness or deafness, are exempt from professional tax obligations.
  3. Parents of children with disabilities.
  4. Charitable hospitals located below the taluk level.
  5. Badli workers (temporary workers) employed in factories.
  6. Individuals operating educational institutions teaching classes up to 12th standard or pre-university level.
  7. Foreign individuals employed by the state government.
  8. Individuals aged 65 years or above.
  9. Women exclusively engaged as agents under the Government’s Mahaila Pradhan Kshatriya Bachat Yojana.
Consequences of Violation of Professional Tax Regulation

 

The consequences of violating professional tax regulations vary depending on the specific legislation of each state. However, common penalties include:

  1. Penalty for late registration: Failure to register for professional tax once applicable may result in penalties. In Maharashtra, for instance, the penalty is Rs 5 per day.
  2. Late payment interest: There may be monthly interest levied for late payment of professional tax. In Maharashtra, the interest rate is typically 1.25% per month.
  3. Penalty for non-payment/delay: What Is Professional Tax A penalty, typically around 10% of the tax amount, may be imposed for non-payment or delay in payment of professional tax.
  4. Penalty for late return submission: Failing to file the professional tax return within the specified due date may result in penalties. In Maharashtra, this penalty ranges from Rs. 1,000 to Rs. 2,000.

It’s essential for individuals and businesses to comply with professional tax regulations to avoid these penalties and ensure smooth operations.

 

Sources : https://cleartax.in/s/professional-tax

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