Professional Tax is a tax levied by the State government. Professional tax is levied on income earned in any trade and is usually paid by the employer.
The maximum amount payable per annum towards professional tax is INR 2,500. The state governments of the following states have levied professional tax – Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Orissa, Tripura and Madhya Pradesh.
Rules and Regulations for Professional Tax
Following are rules that govern professional tax:
There are two types of Professional Tax certificates that a company needs:
- The Professional Tax Registration Certificate (PTRC) is required for its role as an employer, and
- The Professional Tax Enrolment Certificate (PTEC), so that the company can deduct Professional Tax on salaries of a certain amount.
The ‘Certificate of Enrolment’ has to be obtained within 30 days from the date of becoming eligible to pay Professional Tax.
Employers with a ‘Certificate of Enrolment’ can be penalised if they do not deposit the Professional Tax of their employees.
A separate application needs to be submitted for every office a company has, as per the requirement of the particular state where the place of work is situated.
Penalties for Default
There are a few penalties in place for breaching the rules surrounding Professional Tax, including a penalty for delay in making the payment. Its non-payment also invites additional penalty.
Moreover, even a delay in obtaining ‘Certificate of Enrolment’ is penalised at different rates as per states. In case of late filing of returns, a penalty per return will be imposed if return is filed after due date in 1 month.