Taxation

All about Kerala Professional Tax Registration

Kerala Professional tax is levied & collected by the local municipal authorities in India (such as Panchayat, Municipalities, etc.). It comes under the purview of Kerala Panchayat Raj (Professional Tax) Rules 1996.

Professional Tax is being handled by the revenue department of the local self-government. In this article, we will study all about Kerala professional tax registration.

What is Kerala professional tax?          

The government levies professional tax on persons working in government or non – government entities or any profession (such as CA, CS, Lawyers) or salaried individuals.

It is mandatory for all the employees or persons drawing a half-yearly salary of more than 12,000 to pay Professional Tax under the Kerala Municipal Act, 1994^[1].

The concerned municipal authority assesses professional Tax on a half-yearly basis. The government sets the tax rates according to the income slabs of the individuals.

The income from salary can claim the deduction under section 16 of the Income Tax Act, 1961. However, deductions are not applicable for self-employed persons.

What is the Kerala professional tax slab?

The professional tax slab in Kerala is in the tabular form below.

S.No	Half Yearly Income	Half Yearly Professional Tax
1	Up to Rs.11999	Nil
2	Rs.12000 to Rs.17999	Rs.120
3	Rs.18000 to Rs.29999	Rs.180
4	Rs.30000 to Rs.44999	Rs.300
5	Rs.45000 to Rs.59999	Rs.450
6	Rs.60000 to Rs.74999	Rs.600
7	Rs.75000 to Rs.99999	Rs.750
8	Rs.100000 to Rs.124999	Rs.1000
9	Rs.125000 and above	Rs.1250

What are the eligibility criteria for Kerala professional tax?

The entity on which the professional tax will be applicable:

• A company that transacts a business for not less than 60 days has to pay the professional Tax to the concerned municipality.
• Company that transacts outside the municipal area’s scope but its head office is in that municipal area; then it is liable to pay professional Tax.
• A person who exercises a profession, art, or calling or holds any public or private appointment in a municipal area for not less than 60 days.
• A person who exercises a profession outside the municipal area’s scope but resides is in that municipal area for not less than 60 days. It is liable to pay professional Tax.
• A person who transacts a business outside the municipal area’s scope but has his head office in that municipal area for not less than 60 days.
• Any person who resides in the municipal area for not less than 60 days and he receives an income from investment, is liable to pay professional Tax.

Liability of Members of a firm to pay professional Tax

The professional Tax may be levied from the agents of the firm or association.

Liability of Agents to pay professional Tax

Where a company employs a person to act as an agent, to transact the business in the municipal area, then the professional Tax will be levied on the company’s agent and the company is also deemed to have transacted a business in the area.

What are the documents required for Kerala professional tax

The following documents are needed for Professional Tax registration:

• Memorandum of Association (MoA);
• Articles of Association (AoA);
• Lease agreement;
• List of Board of Directors;
• PAN Card;
• Address proof of the employer;
• Identity proof of the employer
• Photograph of the Employer; and
• Employee list with salary details.

What is the procedure for Kerala professional tax registration?

The head of the office or the employer will assess the employees liable to tax and recover the employee’s amount and pay that to the municipality before August & February.

The steps for registration of Kerala Professional Tax can be divided into 2 parts:

Submit an application

Step 1: The information has to be provided to the secretary of the concerned municipality within the employer’s prescribed times.

The details include:

• Employee’s name;
• Employee’s designation;
• Half-yearly income;
• The amount of Tax recovered.

The application form for Kerala Professional Tax must be taken from the concerned Municipality Corporation of Thiruvananthapuram.

Step 2: Once the secretary receives the information, he will register the offices’ name in a register maintained for Professional Tax.

Issue of receipt for Remittance

Step 3: On the payment receipt, the secretary will issue an official receipt in the head office’s name for the amount remitted.

Step 4: A certificate of recovery and payment of Tax of each taxpayer will be granted to the municipality for the half-yearly by the head office.

How can Kerala professional Tax be assessed?

The assessment of professional Tax is done every 6 months. The secretary of the concerned municipality, by notice, every half-year (during May & November), asks the employer or the head of office to assess all the company or firm or institution, who is liable to pay professional Tax.

The details given by the employer must contain the names of all the employees with the salary of the employees.

Calculation of Salary for Professional Tax

This includes basic salary, special allowances, dearness allowance, bonus, extra income (such as arrears, leave surrender, etc.).

What is the penalty for delayed & non-payment of Kerala Professional Tax?

For delayed payment of the Kerala professional tax, a penalty of 1% per month will be levied.

For non-payment a fine of Rs. 5000/- would be levied.

Conclusion

The government levies Kerala professional tax on persons working in government or non-government entities or any profession (such as CA, CS, Lawyers) or salaried individuals and is governed by Kerala Municipal Act, 1994.

Professional Tax compliance is mandatory for every corporation or person and all form businesses like a sole proprietorship, partnership firms, LLP, private limited company.

Read our article:How Does International Taxation Operate?