Professional Tax registration

Professional Tax Registration

All India Service

Indirect Tax in India

Professional Tax is a state-level tax, and it applies to some states in India. All small business or large corporation are required to register, calculate and deposit Professional Tax from the employee's salaries every month to the government.

Employers are mandated to obtain PT registration within 30 days of employing staff. It is indirect tax in India which differs from state to state. It is restricted to a maximum of INR 2,500 and allowed as a deduction under Section 16 of the Income Tax Act, 1961

Types of Professional Tax

Types of Professional Tax

There are two types of Profession Tax certificates that a company needs:

1. The Professional Tax Registration Certificate (PTRC) is required for its role as an employer;

2. and the Professional Tax Enrolment Certificate (PTEC) that empowers the company to deduct Profession Tax on salaries of a certain amount.

Applicability

Applicability

No matter in which state of India you are running your business, you should know that the professional tax registration process is mandatory within 30 days of employing staff in a business or, in the case of professionals, 30 days from the start of the practice.

  • Varies from state to state

  • Employers with Certificate of Enrolment can be penalized if they don’t deposit the PT of employees

  • A separate application has to be submitted for every company branch office depending on the particular state where the office is situated.

  • Foreign Employees in such Companies are not liable to pay Professional Tax

PTRC Payment and Filing of Returns

PTRC Payment and Filing of Returns

The professional tax return must be filed by those having professional tax registration. Returns to be filed monthly/half-yearly or annually depending on the state of applicability within the due date and also on company incorporation date. For example, in the state of Maharashtra, those entities having a professional tax liability of more than Rs.50, 000 are required to file a monthly professional tax return before the last date of each month. Those entities having a tax liability of less than Rs.50, 000 in the previous year are required to file a tax return annually – on or before the 31st of March.

Penalties for Default

Penalties for Default

There are a few penalties in place for breaching the rules surrounding professional tax, including a penalty of 2 % per month for a delay in making the payment. Its non-payment invites a 10 % additional penalty.

Moreover, even a delay in obtaining “certificate of enrollment” is penalised – this is at the rate of INR 2 per day. If the information provided at the time of enrollment is found to be incorrect or false, the penalty is 3 times the tax amount due. Some states slap a penalty of INr\ 300 for every late filing of returns.

FAQs

Every employer in specific states is required to deduct taxes from salary when paid to one or more employees when payment made exceeds Rs 5000(this limit is for Maharashtra) and deposit with state government. That entity is required to obtain registration certificate.

Every employer is liable to deduct Profession Tax (as per the Schedule to the Profession Tax Act) from the salary/wages paid to his employees & to pay the Profession Tax so deducted.

In case of salaried employees who are liable to pay professional tax, the duty lied on the employer to get registered and deduct PT from employee’s salary and deposit the same to the state governments account.

Fails to Get Registration - He will be liable to a penalty for the period during which he remains unregistered.

Fails to Deposit to the Government/ Late Deposition - He will be liable to a penalty for the period during which he remains unregistered.

on-Deposition of Amount. - The officials have power to recover such amount along with applicable penalty and interest from the assets of such defaulter. Moreover, they can attach his bank account also. In serious cases, prosecution case also can be filed.

The penalty prescribed as per section 5(6) for giving false information in an application for Registration Certificate or Enrolment Certificate is equal to three times the tax payable under the Profession Tax Act.

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