Professional Tax and rates in India

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What is Professional Tax ?

Professional Tax' is a tax amount levied by State Governments in India on salaried employees and professionals, including Chartered Accountants, Lawyers, Doctors, Employers, Director of companies, etc

The professional tax calculation and amount varies from one state to another, but it has a maximum limit which is capped to Rs 2500/- per year. It may be noted that professional tax is a deductible amount for the purpose of the Income-tax Act, 1961 and can be deducted from taxable income

Professional Tax is Applicable?

Registration is mandatory within 30 days of employing staff in an establishment or, in the case of professionals, 30 days from the start of the practice.

When a new branch office is opened in any other state, and where the Professional Tax act is applicable, then registration is mandatory within 30 days of employing staff in an establishment.

There is no minimum staff requirement, Professional tax act is applicable when the first staff joins the company.

How to register for Professional Tax?

Registration process differs from state to state, It happens online without any physical document submission, and for few state manual intervention with concern authorities are still required

Registration of any establishment will be in two parts, PTRC and PTEC. A company usually requires both of this registration to conduct business

How to deduct Professional Tax?

The Deduction should be done from monthly salary on the wages paid amount of the employees

If you have employees in more than one state, you will deduct Profession Tax as per state applicable rate, and this rate will vary state wise. Click here or scroll below : PayHR Professional Tax Rates

The amount of deduction or payment for year should not exceed Rs 2500/-

The slab rates for some state is half-yearly, in such cases deduct proportionate monthly amount based on applicable slab rates

How to make Professional Tax Payment?

The payment process is online for most states which are done through registered employer login. For those where no option of online payment is available, it should be managed manually challan and forms as per state prescribed

How to file Professional Tax Returns?

Once the payment is made, the next step is filing return, which happens online for most states and is done through registered employer login. In some states returns are pre-filed before making payments online

When is Professional Tax Applicable?

When is monthly, half-yearly and yearly professional tax payment and return filed?

This point is very crucial which most employers missed and lead to pay penalty and interest

The state where the annual tax limit is fixed, like in Maharashtra if annual tax payment is below Rs 1 Lacs then the payment and return are managed annually in March, for previous years March onwards to February. Example in March 2020 the payment and return will be for March 2019 to February 2020

When the company register for the first time, the payment and return should be done monthly

State like Tamil Nadu, Kerala, etc half-yearly payment and return is applicable

For payments and returns due date, Refer PayHR Professional Tax Rates

To whom Professional Tax is exempted?

Exemptions is provided to certain individuals as per Professional Tax Rules

Parents of children with permanent disability or mental disability

An individual suffering from a permanent physical disability (Including blind)

A person, above 65 years of age

Members of the forces as defined by the "Army Act 1950", the "Air Force Act, 1950" and "The Navy Act, 1957"

Consequences if professional tax registration is not taken and liability is not paid?

Will be liable to a penalty and interest for the period during which remains unregistered and unpaid

The officials have the power to recover such amount along with applicable penalty and interest from the assets of such defaulter. Moreover, they can attach a bank account. In serious cases, the prosecution case also can be filed

What is the difference between PTRC and PTEC?

PTRC PTEC

Professional Tax Registration Certificate

Professional Tax Enrolment Certificate

This certificate is obtained by an employer to deduct and deposit professional tax from employees’ salary

This certificate is obtained by an employer to pay their own professional tax, as well as by professional practitioners such as CA's, Doctors, Advocates, Architects, Directors, Partners, etc. to pay their own professional tax

On completion of registration website credential is received through which monthly payments(PTRC & PTEC) and returns(PTRC) is managed

This will be part of PTRC registration for which the employer will only make PTEC payment online. No return required

The process of Registration is different for each state. Fill the online form and uploaded few mandatory company-related documents electronically on to the state specified website

The process of Registration is different for each state. Fill the online form and uploaded few mandatory company-related documents electronically on to the state specified website

The Payment and return should be managed monthly or half-yearly as per state act

The payment should be done annually as per the state act. Here there is not required to file any returns

Professional Tax applicable States and its rates and slabs

Click on the buttons inside the tab menu:..........Professional tax slab last updated on 05/04/2021

Professional Tax not applicable States in India

Andaman and Nicobar Islands

Arunachal Pradesh

Chandigarh

Chhattisgarh

Dadra and Nagar Haveli

Daman and Diu

Delhi

Goa

Haryana

Himachal Pradesh

Jammu and Kashmir

Ladakh

Lakshadweep

Rajasthan

Uttar Pradesh

Uttarakhand

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