Overview of Professional Tax Registration

Professional Tax registration is assessed by the state government and is, therefore, a state-level tax. The rate of tax differs from state to state. Professional Tax registration is attained by the employer for its employees or by a professional. Every Employer is obliged to deduct and pay professional tax on behalf of their employees. Professionals are also required to get them registered and do so under Article 276 in the Constitution of India. Professional tax is a state-level tax and is imposed by the state government.

These taxes are laid under different sections for distinct states. Under Professional tax, registration is also to be done state wise. The amount of professional tax levied on employees or professionals should not exceed the threshold limit of Rs. 2500 annually.

Benefits

Trust can get a PAN India presence with only two members, unlike a society that requires a minimum of seven members.
Less Compliance involved as compared to Section 8 Company or Society.
Indian Public Charitable Trust is irrevocable in nature and it has lifetime validity. Hence, the members need not stand for elections as is needed in a society.
Unlike Section 8 companies, Trust does not require you to file any annual accounts.

States where Professional Tax is Applicable

As stated earlier, professional tax is a state-level tax, i.e. it varies from state to state. Hence, it is not applicable nationwide, and only a few states assess professional tax in India. Following are the states that have provisions of professional tax -

Andhra Pradesh
Assam
Gujarat
Karnataka
Bihar
Jharkhand
Meghalaya
Maharashtra
Kerala
Mizoram
Madhya Pradesh
Manipur
Sikkim
Odisha
Nagaland
Tripura
Puducherry
West Bengal
Punjab
Tamil Nadu
Telangana

states

Some states where professional tax is not applicable -

Himachal Pradesh
Andaman and Nicobar
Ladakh
Arunachal Pradesh
Chandigarh
Delhi
Chattisgarh
Dadra and Nagar Haveli
Jammu and Kashmir
Daman and Diu
Haryana
Goa
Lakshadweep
Uttar Pradesh
Rajasthan
Uttarakhand

Checklist

A business is required to keep the following documents information to enrol themselves under Professional Tax.

The Salary sheet for all months of its employees.
List of its employees and their details. The required details of the employees include - Name, Aadhar details, the details of the father of an employee, etc.
A Director authorised by the Board of resolution who can propose necessary alterations in the documents.

Documents Required

Documents for the Business

ID proof of founder that may comprise any document such as PAN Card, Aadhar Card, Voter ID, Passport, etc.
Proof of the address details of founders. It may again refer to any document such as Voter ID, Passport, Aadhar Card, etc.
A softcopy of the photograph.
Certificate of formation of a company such as the Registered Partnership deed, COI, etc. Byelaws of the business (MOA, AOA etc)

Documents for Registered Office

Rent Agreement
NOC from the landlord of the property
Electricity or water bill that is not more than 2 months old

Procedure

Signing In - Sign in to the official website of the Professional Tax department. A user ID is to be created once at the portal.
Filling Application Form - A web form is available at the portal and it is required to be duly filled with the details of the Employer and Employees.
Approval - Submit the application form filled along with the required documents. The department then verifies the details altogether. Approval is furnished after verification.
Certificate of Registration - After scrutinizing the details provided, the Professional Tax registration application is approved by the department and it issues the certificate of registration. PT code is provided to create a User ID. Companies can download their copy of the certificate.

FAQs

Generally, When the employee strength of a company or startup exceeds the limit of 5, in a particular state, registration under professional tax is required.

Any company or startup registered under professional tax is required to deduct it from the salary of its employees. It is deposited on a monthly basis to the department by the employer on behalf of its employees.

Senior Citizens, an individual suffering from permanent physical disability including blindness, mentally unstable individuals, etc. are a handful of categories exempted from professional tax.

Non-payment of professional tax attracts a penalty of 10% on the amount of tax to be paid. If a company is late to register itself under the professional tax, then it is required to pay a fine of Rs. 5-20/ day. Late filing of return also attracts penalties ranging from Rs. 1000-2000.

Professional tax rates are different for different states. However, a slab system is followed by every state on the basis of the income of an individual.

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Overview of Professional Tax Registration

Benefits

States where Professional Tax is Applicable

states

Checklist

Documents Required

Procedure

FAQs

When do you need to take registration of professional tax?

Who is responsible to deduct and deposit professional tax?

Who is exempted from professional tax?

What are the consequences of profession tax regulation?

What is the contribution of professional tax?

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