Professional Tax Compliances
Professional tax is the tax levied by the state governments of India. Anyone earning salary or anyone practicing various professions are required to pay professional tax. Several states in India levy this tax which include Maharashtra, Madhya Pradesh, Sikkim, West Bengal, Gujarat, Karnataka, Telangana, Tamil Nadu, Assam, Andhra Pradesh, Chhattisgarh, Bihar, Odisha, Meghalaya, Tripura and Kerala.
These states have their own ways of collecting taxes, own slabs and their own state specific compliance requirements. There is however an upper limit on the tax of Rs. 2500 per year.
Employers are required to apply for registration certificate within 30 days of employing staff in their business. A separate certificate is required for each work location/establishment.
In case of the salaried professionals the employers are responsible to deduct and pay the taxes whereas for self employed and professionals it their own responsibility to pay the professional taxes.
It is applicable to all employers regardless of the number of employees employed in their companies. The tax is deducted from the employees’ salaries based on the slab rates as decided by the respective state governments. If more than 20 employees are there in a company, the professional tax must be submitted within 15 days from the end of the month, whereas if there are less than or equal to 20 employees the employer can pay the tax within 15 days from the end of the quarter.
State governments have specified the penalties for failure to obtain registration certificate, deduct and remit the professional taxes. There are fines and penalties for late payment.
Consequences of Non-Compliance
- For failing to get registration there is a penalty of Rs. 20/day for the period during which the professional is unregistered
- There is an 18% interest on late payment of the tax.
- In case of non-deposit the state officials have the authority to attach the assets and bank accounts of the defaulters. There is a provision wherein the officials can file a case for prosecution of the defaults.
Each state has its own compliance including annual returns in their prescribed formats. Employers and professionals are expected to be aware of these Compliances.
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