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 Read this to understand the professional tax system in India

Similar to income tax, professional tax is also levied on trade or occupation-made money. It is just that, the State government levies it. It is known that the rates of professional tax are way lower than that of income tax. Despite this, you will still have to register and pay them.

Professional tax is when the various Indian state governments in levy a tax on the income that is earned through trade. It can include the income earned through remittance or commerce by an employer. This makes the registration of professional tax and compliance to be an important part of tax management as well as planning. 

Understanding Professional Tax:

The tax that is levied on income generated via callings, trade, profession, or any employment is known as Professional Tax. A noticeable difference between professional tax and income tax is the body through which it is collected. 

The income tax collection is handled by the Central government while the professional tax is handled by the State governments. The assessment’s slab mainly depends on the gross income of the professional. Every month, the employer reduces the amount required from the salary of the employee.

In the Constitution as per Article 276, the State governments are allowed to make laws related to the collection and management of professional tax in the country. This article has the rules and regulations of the tax levied on employment, calling, trades, and even professions. 

The Indian States Requiring Professional Tax Registration:

The individuals from these states will have to complete the compliance and registration of the professional tax in India:

  1. Assam
  2. Maharashtra
  3. Gujarat
  4. Karnataka
  5. Chhattisgarh
  6. Madhya Pradesh
  7. Tamil Nadu
  8. Kerala
  9. West Bengal
  10. Andhra Pradesh
  11. Meghalaya
  12. Orissa
  13. Tripura

The employer will have to deduct the amount that is required as professional tax. Then he will deposit it with the state government whichever is concerned. As we know, the state governments manage the professional tax, the rate of taxation differs. Every state’s slab computes and does the work of collection of the professional tax from the employees. 

For the Applicability of Professional Tax Registration 

In India, these entities and individuals will have to complete the process of registration.

  • Company secretaries Surveyors
  • Insurance agents Chartered accountants
  • Associations Clubs
  • Legal practitioners Contractors
  • Companies Firms
  • Architects Engineers
  • Medical professionals 
  • Societies Hindu united families
  • Tax consultants Management professionals 
  • Limited liability partnerships Corporations

Process of Professional Tax Registration 

The registration procedure is handled by employers mainly. Within only thirty days after hiring someone new, the companies start to apply for registration of professional tax with the state tax department. If any business owns many offices then the applications should be separately made to the authorities that are concerned. 

Any delay in completion of the registration process is liable to penalties and fines. Government charges rupees 5 per day as a late fee for delay per day. Not paying of penalty or fines leads to another penalty of 10% put on the amount that is due. 

Also, filing returns that are late attracts a 300 rupees late fee. The penalties and late fees vary as per states for non-compliance.