What is Professional Tax?
Profession Tax is levied by the state government which is applicable to salaried employees and professionals such as chartered accountants, lawyers, and doctors. Professional tax is levied by the following states in India: Maharashtra, Karnataka, Andhra Pradesh, Kerala, Tamil Nadu, Gujarat, West Bengal, Assam, Chhattisgarh, Meghalaya, Orissa, Tripura, and Madhya Pradesh.
What is Professional Tax Registration?
Professional Tax registration is mandatory for the business within 30 days of employing staff and for professionals within 30 days of start practicing. The professional tax has to be deducted from the salary/wages paid. However, the amount of professional tax varies from state to state which is capped at Rs. 2500 per annum. If you have employees in more than one state then in each state professional tax registration is required to be obtained.
In Bangalore, the professional tax is governed by the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976. If the employee and professional have a monthly income of more than the limit prescribed then they have to pay professional tax. Professional tax payment can also be made online.
Discuss the applicability of Professional Tax
The profession is applicable to everyone except the following:
- Senior Citizens
- Low wage earners
The best part is, there is a uniform rate for professional tax which means there is a single slab. Whereas in the case of other states professional tax slabs are decided on the basis of earnings.
What are the Professional Tax rates in Bangalore?
In case of Salaried or Wage Earner
|Below Rs. 15,000/- Per Month||No Professional Tax|
|Above Rs. 15,000/- Per Month||Rs. 200 Per Month|
In the case of Professionals
Professional tax schedule is prescribed by the Karnataka Government.
Note: Maximum Professional Tax in Karnataka is Rs. 2500/ Per Annum.
Who has to pay Professional Tax in India?
The following has to pay Professional Tax:
- A person employed in a public /private establishment
- A person engaged in trade activity
- A professional
- A businessman
In Karnataka, for the purpose of professional tax, the definition of person is very wide. Followings are considered as “Person”:
- HUF (Hindu Undivided Family)
- Corporation/ Firm
- Co-operative Society
- Club or Association
- Other Corporate Bodies
Note: For the purpose of tax liability, every branch will be treated as a separate firm.
Professional Tax Registration Exemption in Karnataka
For the following below mentioned professional tax registration is exempt in Karnataka:
- Senior Citizens are exempt from paying professional tax
- All charitable and philanthropic hospitals or nursing homes situated in all the districts in places below the taluk level except Bangalore and Bangalore Rural District.
- If you are a director of a company registered in Karnataka and simultaneously nominated by the financing agencies which are owned or controlled by the State Government or by other statutory bodies.
- Such foreign technicians who are employed in the State and their appointment is approved by the Government of India for the purpose of tax exemption for the defined period (exemption for a period of 2 years from the joining date).
- Professional tax is also exempt for the members of the Armed Forces who are governed by the Army Act, the Navy Act, and the Air Force Act.
- Blind persons earning salaries and wages.
- Deaf and dumb persons, earning salaries and wages.
- Single taxi or single three-wheeler goods vehicle permit holders.
- Institutions which are involved in teaching Kannada or English Shorthand or Typewriting.
- A Physically handicapped person who must not have less than 40% of permanent disability (subject to production of a certificate from the HOD of Government Civil Hospital).
- If you have a single child and has undergone sterilization operation, however, production of a certificate from the District Surgeon, Government Civil Hospital is mandatory.
- Central Para Military Force (CPMF) Personnel
- If an educational institution is carried by you in respect of their branches teaching classes up to 12th standard or pre-University Education.
What will be the effect of Non-Registration of Professional Tax/ Non-Filing of return/ Non-Payment of Tax in Karnataka?
- Employer Registration
In case of nonregistration for professional tax by an employer, the penalty would be Rs 1000. In case of any other person Rs. 500/-.
- Employee Registration
In case of nonregistration for professional tax by an employee the penalty would be from the date of employment till the registration is obtained with simple interest at 1.25% for each month besides this there will be a penalty equal to the tax to be paid till the date of payment.
- Non Filing of Return
In case of non-filing of the professional tax return, the penalty is Rs. 250/- for an employer.
- Non Payment of Tax
In case of the non-payment of tax by the enrolled person and registered employer, interest at the rate of 1.25% per month and the penalty will not exceed the 50% of the tax amount due.
What will be the process of Professional Tax Registration?
Professional Tax registration is mandatory for the employer within a period of one month by filing form 1. Professional Tax registration has to be done within 30 days of professional tax liability. For professional tax registration, form 2 is used in case of a person other than the employer.
Online Professional Tax Registration
One can also apply for professional tax registration online. Online enrollment is quite easy and it can be done on the website of the government of Karnataka.
Following tasks need to be performed for professional tax registration:
- Professional Tax registration application enrolment
- Print of the Enrolment Application
- Enrolment certificate
- Enrolment acknowledgment
- Professional Tax return e-filing
What are the documents required for Professional Tax registration in Karnataka?
Following documents are required for Professional Tax registration in Karnataka:
- Passport size photograph of Proprietor, Partner in case of partnership firm or Directors in case of a company as per the applicability
- Address proof of Proprietor, Partner in case of partnership firm or Directors in case of a company as per the applicability
- Address Proof of establishment
- PAN (Permanent Account Number)
- Employee salary details
In case Professional Tax registration was not obtained in the first year then financial statements are also required to be submitted. If it not the first year or you have not obtained the PT registration at the start of business or profession you need to also provide financial statements.
How much Professional Tax is paid by the Employer and how much Professional Tax is required be paid by the employer on the behalf of employees?
Professional tax is required to be paid by every employer every year before 30th April. Professional tax is also required to be deducted from the salary of employees and remit to the respective government. The details of professional tax payable by the employer are listed under the schedule of Professional Tax Act.
Professional Tax Payable by the employer is defined below:
|In case of no employees||Nil|
|In case of a maximum of 5 employees||Rs. 1000/- Per Annum|
|In case of more than 5 but not more than 10 employees||Rs. 1500/- Per Annum|
|In case of more than 10 employees||Rs. 2500/- Per Annum|
All the dealers who are registered or liable to be registered under the Karnataka Sales Tax Act, 1957 / The Karnataka Value Added Tax Act, 2003 having following a turnover in any year:
|Not more than Rs. 2 lakhs||Nil|
|More than Rs. 2 lakhs but less than Rs. 10 lakhs||Rs. 1000/-|
|More than Rs. 10 lakhs but less than Rs. 25 lakhs||Rs. 1500/-|
|More than RS. 25 lakhs||Rs. 2500/-|
When the salary of the employee is more than Rs. 15000 or more, Professional Tax (PT) shall be deducted maximum Rs. 200 per month.
How we can file Professional Tax Return?
Once you will get registered with the Professional Tax registration department, Id Password will be issued in order to file a professional tax return. By using such Id password you can file a professional tax return on the website of the Karnataka government. For professional tax return filing you need to login to your account and on the basis of requirements such as monthly filing or quarterly filing, payment should be made.
How we will help you in Professional Tax Registration?
- Collection of all the necessary documents
In the first step, our experts will collect the necessary documents for your Professional Tax registration.
- Preparation for Professional Tax Registration
On the basis of the given documents and information, our experts will apply for Professional tax registration with the Karnataka government.
Now, to complete this process, you have to fill an inquiry form on our website and click on Get Started button. Our expert will call you back and solve your query. After the initial payment, our system will generate your order no which will be allocated to a dedicated in-house CA.