Professional Tax

Professional Tax is a tax levied on every person earning income from any profession, trade or employment. As per Article 276 of the Constitution of India, every State Government has the right to levy professional tax. Accordingly, every person earning income / working in Mumbai, Thane or Navi Mumbai has to compulsorily pay tax to the Government of Maharashtra. Professional tax rates / fees differ from State to State. However, a maximum amount of Rs.2,500 for every financial year can be levied on any person.

There are two categories of persons on whom the Professional Tax is levied, viz –

1. Self-employed + Business owners – Persons (natural as well as legal) who are self-employed, proprietors, employer or engaged in any profession, trade or calling
2. Employees – Persons under employment of private entities

The due dates for payment of tax, type of registration and extent of compliance requirements are different for the above categories.

Types of Registration – PTEC or PTRC

Professional Tax Enrollment Certificate (PTEC)

Every person (natural as well as legal) engaged in any profession, trade or calling is liable to pay professional tax. This refers to persons who are not employed by anyone else rather are self-employed or business owners. Such persons are required to obtain PTEC within 30 days from date of commencement of profession, trade or calling.

It includes companies, directors of companies, partners of firm, Limited Liability Partnerships (LLPs), independent professionals, traders, dealers, proprietors, etc. However, partnership firms and Hindu Undivided Family (HUF) are expressly excluded from the scope of professional tax.

They are liable to pay professional tax by 30^th June of the relevant financial year and are not required to file any kind of return with respect to such liability.

Professional Tax Registration Certificate (PTRC)

Salaried persons are also liable to profession tax but their tax is to be deducted and paid by the employer. Entity paying salary of more than Rs.7,500 per month to any employee is mandatorily required to obtain PTRC. Such entities are responsible for –

1. Obtaining PTRC – within 30 days from the date it becomes liable
2. Deducting Professional Tax – from salary (or wages) of employees (or workers)
3. Depositing the same with State Government – at the time of return filing
4. Filing PT return – monthly or annually, based on total amount payable

As stated above, although the employer is responsible for paying professional tax to government, the same can be deducted from employee’s salary since it is employee’s liability. Professional tax is levied on the employee who earns income from his employment.

An entity required to obtain PTRC, for paying professional tax liability on behalf of its employees, is also required to obtain PTEC, for paying professional tax liability on its own account.

Sahyog Tax & Finance Advisory Limited helps entities obtain registrations under the Professional Tax Act as well as file applicable returns at very reasonable and transparent charges / fees.