Professional Tax Registration

Overview

Professional Tax is a tax levied by State Governments in India on individuals who earn a living through employment, professions, or trades. The tax is collected by employers who deduct the tax amount from their employees’ salaries and deposit it with the concerned State Government.

Professional Tax Certificate

Varieties Outlined below are the types of Professional Tax Certificates:

• PTEC (Professional Tax Enrolment Certificate) Business entities like Private/Public Limited Companies, owners, or professionals such as Sole Proprietors or Directors pay professional tax through this certificate.
• PTRC (Professional Tax Registration Certificate) In this case, tax is withheld from an employee’s salary by Government or Non-Government employers and remitted to the state government.

Note: Exemptions on professional tax may apply as per the specific State’s provisions for certain groups.

Significance of Professional Tax Registration

1. Compliance and Legal Obligation: Professional tax registration ensures compliance with state laws and regulations, serving as a legal obligation that professionals need to fulfill.
2. Resource Allocation: The tax revenue collected through professional tax registration is channeled into state coffers to fund essential services, infrastructure development, and public welfare initiatives.
3. Professional Standing: Registering for professional tax enhances the credibility and standing of professionals and businesses in their respective industries, showcasing a commitment to regulatory compliance.

Who Needs to Register for Professional Tax?

The obligation to pay Professional Tax is determined by the applicable state’s laws. Below is a list of entities eligible for Professional Tax Registration:

• Individuals
• Companies (Public/Private/One person)
• Partnerships
• Cooperative Societies
• Associations of Persons
• HUF (Hindu Undivided Family)

Conditions

Professional Tax registration is mandatory for employers in India who have employees working in the States where the tax is levied.

Key Documents for Professional Tax Registration

Below is the list of necessary documents for Professional Tax Registration:

• Completed Application Form.
• For companies: COI, AOA & MOA, and PAN of the company, certified by a Director.
• Directors’ address and identity proofs, with passport-sized photographs.
• Company’s bank details, including a bank statement and a cancelled cheque.
• Registered Office proof, such as a rent agreement for rented properties, and an NOC from the landlord.
• For companies: Board Resolution; for partnerships: Partner’s consent declaration, along with Salary and attendance registers.

Professional Tax Registration Process

The process for Professional Tax Registration varies by state, and returns must be filed periodically as per each state’s regulations. Professionals/Employers must adhere to the following steps:

• Application Submission with Documents Applicants are required to file their application form along with the necessary documents.
• Application Delivery to State Government & Tax Department The completed application and documents must be submitted to the respective state government and a copy to the tax department.
• Examination by Tax Authority The tax authority will review the application to verify all details are accurate.
• Registration Certificate Issuance Upon successful verification, the tax authority will issue a Registration Certificate.

Penalties for Non-Compliance with Professional Tax Regulations

Penalties for failing to comply with Professional Tax obligations vary by state. The following instances may incur penalties:

Non-registration defaulters who do not register will face penalties for the duration of non-registration.

Delayed Payment Penalties are imposed for late payment of the due tax amount to the government.

Non-Payment Officials may recover unpaid taxes with interest from a defaulter’s assets, which can include bank account attachment. Severe cases may lead to prosecution.

Additionally, penalties apply for not initiating payment by the due date and not filing returns on time.

• A daily penalty of Rs 5/- is charged for late registration certificate acquisition.
• A 10% penalty on the tax amount is levied for non/late tax payment.
• For late return filing, the penalty is Rs 1000, increasing to Rs 2000 if delayed by over a month.

Responsibility for Professional Tax Collection and Payment

Professional tax is due from every income-earning individual, but the calculation and collection method differs by state. Each state sets its own slab rates for tax payment and collection. The Commercial Tax department of the respective state collects this tax, either monthly or annually, via PTEC or PTRC Certificates, with an annual cap of Rs. 2500.

Why Choose Corporate Raasta? 

Corporate Raasta stands out as a premier platform for all your legal and financial needs, offering access to professional services. Our clients appreciate our dedication to simplifying legal processes, earning us high regard for our legal services.

Clients have the advantage of monitoring their case progress on our platform. For inquiries about TDS Return Filing, our knowledgeable team is just a call away. Corporate Raasta promises a smooth and enjoyable interaction with professionals.

Corporate Raasta’s Support in Professional Tax Registration

• Select a plan for expert guidance
• Submit your Professional Tax Registration queries
• Provide necessary documents to Corporate Raasta specialists
• We’ll prepare and screen your Professional Tax Registration application
• Handle all procedural steps
• Achieve your Professional Tax Registration effortlessly from home!

We require basic information to initiate the process. Once we have all the details and payment, our Attorney will commence work on your service request.

Professional tax differs across states

State-Specific Authority: 

Professional tax is a levy imposed by individual state governments, not the central government. This allows each state to tailor it to their specific needs and priorities. Each state sets its own income slabs for professional tax. These slabs determine the tax amount based on your income level. This can lead to different rates across states for the same income bracket.

Exemptions and Additional Taxes:

Some states may completely exempt certain professions or income levels from professional tax.

Additionally, a few states might impose separate professional taxes on specific sectors, like transport, calculated differently from the standard professional tax.

Frequency and Calculation:

• While some states follow a monthly deduction system, others might have quarterly or half-yearly payments. The calculation method for annual tax into installments may also vary.

National Limit:

• It’s important to note that there’s a national maximum limit of Rs. 2,500 per year for professional tax, regardless of the state. However, the actual amount you pay can be lower depending on your state’s structure.