PROFESSIONAL TAX
What's Professional Tax– Accounting & Enforcement
The Union Budget 2020 highlights here.
Many salaried employees may be well aware of the term 'professional tax' as mentioned in the payslips / Form 16 issued to them. But all may or may not understand what it is, and why it appears as a deduction from their wage income in their payslips / Form 16. Therefore, this article is an attempt to give a better picture of what is 'Professional Tax' and why it is deducted, and it is only salaried class that bears it.
We'll discuss the following topics in this article:
What is, and who levies, qualified tax?
Professional tax rate
Who should collect and pay professional tax?
What's the professional tax procedure? Is any return to file?
Violation of qualified tax laws
1. What is, and who levies, professional tax?
The nomenclature 'Professional tax' could be one of those terms that don't fully convey the term's real meaning. Unlike the name suggests, it's just not the professional tax. This is a levy for all types of occupations, trades and workers and imposed on the basis of skilled wages, commerce and education. This is imposed on workers, a individual in industry, including freelancers, practitioners, etc., due to compensation that meets the monetary level if any.
The State Government is also empowered to create laws on professional tax.
It should be remembered that for the purposes of the Income-Tax Act, 1961, Professional tax is an exempt sum that may be excluded from taxable profits.
2. Professional tax rate
The state government levies qualified duty in various jurisdictions. Every state has its own laws and regulations regulating the state's professional fee. All states, however, follow the income-based slab system to levy professional tax.
Further, Article 276 of the Constitution which empowers the State Government to levy professional tax also has provided for a maximum limit of Rs 2,500 above which professional tax can not be levied on any citizen.
Professional tax slab
Monthly salary to Rs 15,000 NIL
Monthly pay from Rs 15,001 – Rs 20,000 Rs 150 / month
Monthly wage > Rs 20,000 Rs 200 / month
3. Who should collect and pay professional tax?
Professional tax is collected by the Commercial Tax Department. The corresponding states' corporate tax agency receives money, which then enters the municipal corporation's budget.
Individual liable for professional tax
In the case of workers, an employer is a individual liable for deducting and charging professional tax to the State Government according to the monetary level given by the laws of the respective State. Additionally, contractor (corporations, business companies, sole proprietorship, etc.) and becoming a trading / technical individual is often forced to pay income tax on his / her trade / profession again according to the monetary level if any given by the respective State legislation. In such cases , the employer must register and obtain both professional tax registration certificate in order to be able to pay professional tax on his trade / profession and professional tax registration certificate in order to be able to deduct tax from his employees and pay. Therefore, different registration can be necessary for each agency, based on the legislation of the respective State.
Persons engaging in freelancing without employers are often expected to declare themselves according to the monetary standard, if any, established by the laws of the respective State.
A professional tax levy, however, is subject to the exemption granted by the State to certain categories. For example, parents or guardians of any person suffering from mental retardation are exempt from Karnataka Professional tax among others.
4. What's the professional tax procedure? Is any return to file?
Another state-specific query. Overall, though, a qualified tax may be charged online / offline. Therefore, qualified tax reports may always be submitted at prescribed times, based on the state 's necessity.
5. Violation of qualified tax laws
Although the exact sum of fine or punitive interest that rely on the laws of the particular state, all these states that enforce a fine for not reporting until qualified tax law is relevant. Often, there are provisions for not submitting the reimbursement during the due date and failure to submit the return within the defined due date.
For example: In the State of Maharashtra Rs 5 / day is levied as a penalty for delay in registration, interest @ 1.25% per month of delay in payment, a penalty of 10% of the value of tax in case of delay / non payment of qualified fee, penalty Rs 1000 – Rs 2000 for delay in filing the return
The Union Budget 2020 highlights here.
Many salaried employees may be well aware of the term 'professional tax' as mentioned in the payslips / Form 16 issued to them. But all may or may not understand what it is, and why it appears as a deduction from their wage income in their payslips / Form 16. Therefore, this article is an attempt to give a better picture of what is 'Professional Tax' and why it is deducted, and it is only salaried class that bears it.
We'll discuss the following topics in this article:
What is, and who levies, qualified tax?
Professional tax rate
Who should collect and pay professional tax?
What's the professional tax procedure? Is any return to file?
Violation of qualified tax laws
1. What is, and who levies, professional tax?
The nomenclature 'Professional tax' could be one of those terms that don't fully convey the term's real meaning. Unlike the name suggests, it's just not the professional tax. This is a levy for all types of occupations, trades and workers and imposed on the basis of skilled wages, commerce and education. This is imposed on workers, a individual in industry, including freelancers, practitioners, etc., due to compensation that meets the monetary level if any.
The State Government is also empowered to create laws on professional tax.
It should be remembered that for the purposes of the Income-Tax Act, 1961, Professional tax is an exempt sum that may be excluded from taxable profits.
2. Professional tax rate
The state government levies qualified duty in various jurisdictions. Every state has its own laws and regulations regulating the state's professional fee. All states, however, follow the income-based slab system to levy professional tax.
Further, Article 276 of the Constitution which empowers the State Government to levy professional tax also has provided for a maximum limit of Rs 2,500 above which professional tax can not be levied on any citizen.
Professional tax slab
Monthly salary to Rs 15,000 NIL
Monthly pay from Rs 15,001 – Rs 20,000 Rs 150 / month
Monthly wage > Rs 20,000 Rs 200 / month
3. Who should collect and pay professional tax?
Professional tax is collected by the Commercial Tax Department. The corresponding states' corporate tax agency receives money, which then enters the municipal corporation's budget.
Individual liable for professional tax
In the case of workers, an employer is a individual liable for deducting and charging professional tax to the State Government according to the monetary level given by the laws of the respective State. Additionally, contractor (corporations, business companies, sole proprietorship, etc.) and becoming a trading / technical individual is often forced to pay income tax on his / her trade / profession again according to the monetary level if any given by the respective State legislation. In such cases , the employer must register and obtain both professional tax registration certificate in order to be able to pay professional tax on his trade / profession and professional tax registration certificate in order to be able to deduct tax from his employees and pay. Therefore, different registration can be necessary for each agency, based on the legislation of the respective State.
Persons engaging in freelancing without employers are often expected to declare themselves according to the monetary standard, if any, established by the laws of the respective State.
A professional tax levy, however, is subject to the exemption granted by the State to certain categories. For example, parents or guardians of any person suffering from mental retardation are exempt from Karnataka Professional tax among others.
4. What's the professional tax procedure? Is any return to file?
Another state-specific query. Overall, though, a qualified tax may be charged online / offline. Therefore, qualified tax reports may always be submitted at prescribed times, based on the state 's necessity.
5. Violation of qualified tax laws
Although the exact sum of fine or punitive interest that rely on the laws of the particular state, all these states that enforce a fine for not reporting until qualified tax law is relevant. Often, there are provisions for not submitting the reimbursement during the due date and failure to submit the return within the defined due date.
For example: In the State of Maharashtra Rs 5 / day is levied as a penalty for delay in registration, interest @ 1.25% per month of delay in payment, a penalty of 10% of the value of tax in case of delay / non payment of qualified fee, penalty Rs 1000 – Rs 2000 for delay in filing the return
