We all know about the term “Income tax” collected by the Income Tax Department of India. Professional tax is similar to income tax, but unlike income tax, it is collected by the state government. Professional tax deducts from the employee's salary income or applies to the income of professionals and businesses for their trade and profession. Many employees may not be aware of the professional tax registration process, tax rate slab, and who is responsible for deducting the professional tax. This article contains explanations related to professional tax and professional tax registration in India.
Unlike its name, professional tax is not just applicable to professionals but it is levied on all kinds of trades, employment, freelancers, and professionals.
Professional tax is deductible from taxable income under section 16(iii) of the Income Tax Act 1961, and tax rates vary in different states of India and follow a slab system. The Commercial Tax Department collects professional tax and reaches the fund of the municipal corporation. However, professional tax is not applied in some states.
What are the types of professional tax certificates?
There are two types of professional tax certificates-
Professional Tax Enrollment Certificate (PTEC): It applies to owners of business entities, i.e., public and private companies, sole proprietors, partnership firms, and professionals.
Professional Tax Registration Certificate (PTRC): It applies to government/ non-government employers, and they deduct the tax from the employee's salary and pay it to the government.
Who is liable to pay professional taxes?
Individuals carrying freelance business without employees must register if the income exceeds the threshold provided by the state’s legislation.
Owners of sole proprietorships, corporates, and partnership firms are required to pay tax on their trade and profession if income exceeds the threshold. Employers must register for professional tax registration and obtain the certificate of professional tax registration certificate.
An employer is liable to deduct the tax from their employee's salary and deposit it to the state government, and it is also subject to the monetary threshold.
Who is responsible for collecting professional tax?
The Commercial Tax Department collects professional tax. The commercial tax department of the respective states collects it, ultimately reaching the municipal corporation's fund.
What are the Exemptions in professional tax?
Any person having a mental or physical disability
Parents of a child with a disability
Temporary factory workers
State-employed foreign individual
Any individual aged 65 years or older
Individuals running educational institutions
Employees of force (Governed by Army, Air Force, Navy Act)
Professional Tax Rates in Different States of India
Every state has laws and regulations different from any other state, Professional tax rates are also different in different states.
Professional tax slab for few states
The professional tax rate on salary in Gujarat
Monthly Gross Salary | Professional Tax |
Up to 12000 | Nil |
₹12000 and above | ₹200 Per month |
The professional tax rate on salary in Andhra Pradesh
Monthly Gross Salary | Professional Tax |
Up to ₹ 15000 | Nil |
₹ 15,001 to ₹ 20,000 | ₹ 150 per month |
₹ 20,000 and above | ₹ 200 per month |
The professional tax rate on salary in Bihar
Annual Salary | Professional Tax |
Up to ₹ 3,00,000 | Nil |
₹ 3,00,001 to ₹ 5,00,000 | ₹ 1000 per month |
₹ 5,00,001 to ₹ 10,00,000 | ₹ 2000 per month |
₹ 10,00,001 and above | ₹ 2500 per month |
The professional tax rate in Karnataka
Monthly Gross Salary | Professional Tax |
₹ 1 to ₹ 9,999 | Nil |
₹ 10,000 – ₹ 14,999 | Nil |
₹ 15,000 and above | ₹ 200 per month |
The professional tax rate in Kerala
Half year Salary | Professional Tax half yearly |
Up to ₹ 11,999 | Nil |
₹ 12,000 to ₹ 17,999 | ₹ 120 |
₹ 18,000 to ₹ 29,999 | ₹ 180 |
₹ 30,000 to ₹ 44,999 | ₹ 300 |
₹ 45,000 to ₹ 59,999 | ₹ 450 |
₹ 60,000 to ₹ 74,999 | ₹ 600 |
₹ 75,000 to ₹ 99,999 | ₹ 750 |
₹ 1,00,000 to ₹ 1,24,999 | ₹ 1000 |
₹ 1,25,000 and above | ₹ 1250 |
Online Professional Tax Registration in India
Professional tax registration online process varies in different states of India. Employers need to check with state commercial departments' websites to know more about tax slabs and online professional tax registration in India.
procedure for professional tax registration in India may be similar in different states. Payers can register themselves at the local commercial department of the state government.
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