In India Professional taxation is similar to income taxation, but it is collected by the state government. However, contrary to what its name implies, it is not just imposed on professionals. It is a tax placed on all professions, trades, and employment depending on the income of such profession, trade, or job. It is levied on employees, self-employed individuals, freelancers, professionals, and those who earn more than the monetary level.
Article 276 of India’s constitution, which deals with tax on professions, trades, callings, and employment, empowers state governments to adopt laws relating to professional tax, despite the fact that it is a tax on income. Professional tax is deductible under the Income-tax Act of 1961 and may be deducted from taxable income.
The Commercial Tax Department is in charge of collecting professional tax. It is collected by the commercial tax departments of the individual states and eventually reaches the Municipality Corporation budget.
What is Professional Tax Registration
Firstly, let us understand what is professional tax registration. In basic terms, if you are employed and make a monthly wage, you are expected to pay professional tax. A professional tax is a tax charged by the state government on everyone who earns a living in whatever way.
This is a tax placed on all vocations, trades, and employment depending on the earnings or income of the same profession, occupations, and employment. It is imposed on workers or employees, individuals carrying on businesses, including freelancers, and so on, based on income tax that exceeds the financial threshold, if any. The professional tax registration in Maharashtra, West Bengal Professional Tax Registration, and other states it’s almost the same.
Who Is in Responsibility for Paying Professional Taxes
Employers are responsible for computing, collecting, and remitting professional tax on behalf of their employees to the appropriate state government. They must do so in accordance with the applicable State’s legislative obligations, including any financial restrictions.
A person who engages in a trade or profession, such as an employer, corporation, partnership business, limited company, or other entity, is also required to pay professional tax on that trade or profession in accordance with the financial barrier (if any) specified by the relevant State’s regulations.
Who is not Required to Pay Professional Tax?
Below, we have mentioned the members who are exempted from the professional tax. They are as follows:
- Foreign employees are exempt from the Professional Tax.
- Any person over the age of 65 years.
- Any temporary employee employed in the textile business.
- Parents or guardians of any disabled kid or children (permanent or mental)
- Any woman who works only as an agent for the Indian government’s Mahila Pradhan Kshetriya Bachat Yojana.
- Anyone with a permanent physical handicap, including blindness.
- Any member of the services as defined in the Air Force Act of 1950, the Navy Act of 1957, and the Army Act of 1950, including members of reservists or auxiliary forces serving in the respective State.
Is Professional Tax Registration Required?
Yes, any professional, LLP Designated Partners, Company Directors, or other employer is required to register for Professional Tax. Furthermore, it is carried out to ensure that professional tax is deducted from employee’s earnings. Employees’ professional tax deductions must be deposited at the appropriate state-authorized office.
A professional tax return must be filed detailing the professional tax payment. Every employer is expected to deduct and pay taxes on their employees’ behalf. The employer must get a certificate of registration from a professional tax department within 30 days of the date of liability generation for this purpose.
What Exactly is a Professional Tax Certificate?
Professional tax certifications are classified into two types:
- PTEC (Professional Tax Enrollment Certificate): This is payable by the business entity, owner, or professional, such as a Private/Public Limited Company, Sole Proprietor, Director, and so on.
- PTRC (Professional Tax Registration Certificate): A government or non-government employer deducts and deposits taxes from employees’ pay. Professional tax is levied when a person begins his profession or business within 30 days of establishing it. If the company has a presence in multiple locations, registration for each location is required.
Professional tax registration certificate download
A professional tax certificate can be obtained by using the online application portal.
For example – if you want to download the Professional Tax Registration in Chennai you can simply visit their website.
And, once you are here, register yourself and download the Professional Tax Registration in Chennai certificate.
What is the scope of the Profession Tax?
In the following section, we have mentioned the applicability of Professional Tax. They are as follows:
Companies, firms, LLP, corporations, societies, HUF, Associations, and clubs are all taxable entities.
Legal practitioners such as solicitors and notaries, medical representatives such as dentists, medical consultants, doctors, and other professionals such as management consultants, tax consultants, surveyors, CS, CA, Insurance agents, engineers, architects, and contractors are all considered professional individuals who must pay professional tax.
What is the process of professional tax registration?
The method for Professional Tax Registration differs by state:
- The tax slab rates can fluctuate from one state to the next. If a business owner has employees in multiple states, he or she must obtain professional tax registration in each of those states.
- The frequency with which one must file returns is determined by the state in which the person resides. Before submitting a return, it is critical to understand the state’s rules. Register as a professional tax payee with a local professional tax office in that state.
- Register as a professional tax payee with a local professional tax office in that state. It is required for all individuals and enterprises who are required to pay taxes.
- In the prescription form, compute the professional tax pay. The chartered accountant must audit the payment and calculations.
- When it comes to employees, the employer is required to withhold employee pay for professional tax.
- Once a person is registered, he is required to pay Professional Tax; different professions have varying PT rates.
What documents are required for Professional Tax Registration?
Here is a list of some required paperwork for Companies/LLP/Partnerships for Professional Tax-Exempt Status.
- Bank Account: Canceled Cheque, Proof of Company Bank Account and Bank Statement, or Bank Account of LLP or Firm with Canceled Cheque and Bank Statement.
- PAN Card: The Director of the Company must certify the Company’s, PAN Card. The Designated Partner of the LLP or any partner of the Partnership firm must authenticate the LLP’s or Partnership firm’s PAN card.
- Lists: This should contain
All Directors’ list or All Partners’ List.
List of additional personnel at a corporation, LLP, or partnership.
- Certificate of Incorporation: The Company’s incorporation certificate includes the following:
Memorandum of Association.
Articles of Association.
LLP Agreement or Certificate.
Certificates of Partnership Firm Registration or Partnership Deeds are all examples of organizational documents.
- Identity Proof: Aadhaar cards or any other forms of identification proof from each director or partner, together with passport-size images of all directors or partners.
- Registration: Both the Salary Register and the Employee Attendance Register are necessary.
- Address Proof: If the applicant owns the property, they must provide address proof and ownership paperwork; if not, they must provide a rent agreement and a (NOC) no objection certificate from the property owner.
- If the applicant owns the property, ownership documentation must be submitted; if not, a rent agreement and (NOC) no objection certificate from the property owner must be submitted. Address Verification for LLP/Firms.
- Acceptance: A Board Resolution enabling professional tax registration was adopted by a director of the company. approval from partners for the registration of the professional tax certificate application.
- A letter of authorization: An authorization letter including the signature of the Partners or Directors is necessary to receive a user ID and password for the Professional Tax Department.
- Other/Additional Personal Documents: A PAN card, passport, driver’s license, voter ID, or an Aadhaar card are acceptable forms of identification for the director’s or partners’ personal documents. Utility bills such as electricity or phone bill are acceptable forms of residence verification.
- The following is a list of several documents that are important for professional tax-
- Owner’s PAN card with self-attestation
- The proprietorship’s bank account, bank statement, and canceled check.
- Photographs of the proprietor in passport size
- Address Proof of Proprietorship – Rent agreement and NOC (no objection certificate) from the property owner is required in other circumstances if the applicant or proprietor does not own the premises.
- Documents of the Proprietor – For address proof, telephone bills, electricity bills, and other utility bills are allowed, and identification proof such as a passport, PAN card, driving license, Aadhaar card, or voter card is acceptable.
- The attendance book and the salary book
- Authorization letter to access the Professional Tax Department’s user ID and password.
Individual Professional Tax Registration Documents
- The PAN card of the proprietor, the bank account of the proprietorship, the canceled cheque, and the bank statement
- Size of a passport Photographs of the Proprietor Address evidence of Proprietorship – Ownership papers if the applicant owns the premises; otherwise, rent agreement and no objection certificate from the owner of the premises.
- Proprietor’s Documents – I.D. proof such as PAN card, Passport, Driving License, Voter Card, Aadhaar Card, and Address proof such as Electricity Bill, Telephone Bills, and other utility bills are accepted.
- Attendance Register and Salary Register Authorization Letter for getting a Professional Tax Department user ID and password
Who is in charge of deducting professional taxes?
An employer is responsible for deducting professional tax from his or her employees’ salary and depositing the collected money in the proper government department, as well as filing a return to the department in a prescribed form with proof of tax payment within a specified time frame.
Employer (Corporation, sole proprietorship, or private limited company) is also required to pay tax on his trade or business.
Which Entity Collects Professional Tax?
Professional Tax is collected by the Commercial Tax Department. Such a division is present in each state and is responsible for overseeing professional tax. The sum total is then transferred to the municipality corporate fund. Employers may take this from employee salaries and pay it to the state government.
Similar to individuals, corporations are also required to pay professional tax if their income reaches a certain threshold because they engage in trade or commerce. As a result, the employer must obtain the professional tax registration certificate and register with the necessary agency. If a freelancer’s financial advantage surpasses a certain amount, they must also register and pay professional tax.
Professional Tax Slab
Every state has its unique legislation since different state governments levy professional taxes. But each state uses a slab structure to collect professional tax. State governments may impose a professional tax of up to 2,500 in accordance with Article 276.
Benefits of the Professional Tax Relief Firm
- Professional guidance: You won’t ever again need to handle all of your tax-related problems independently. You won’t ever be alone again when it comes to your tax problems because you have tax professionals assisting you with your tax-related tasks!
- Make your balance less overall: The majority of the time, additional fees, fines, and interest are included in the total amount you must pay the government. You can lower the amount you owe the government by filing for relief by working with a reputable tax relief service. These companies assess your situation and then come up with strategies to help you lower your fines and penalties.
- Prevent having your property seized: In certain extreme situations, people lose their houses and other possessions as a result of their failure to pay their taxes. Working with a qualified tax relief company will help you to prevent this. They will devise strategies to help you get out of such predicaments and prevent such tragic events.
While these are the main advantages of working with such companies, there are a number of other advantages as well. Here are some of the other advantages they offer. They are as follows:
- Keeping your account from being levied
- Halt wage garnishment for taxes
- Pay off all of your owing taxes.
- Be careful not to become overwhelmed by previous returns.
- Participate in audits
- Avoid having your credit score lowered by delinquent bills.
- Enjoy more mental tranquility
- Protection of Income and Assets
- Aids you in understanding tax laws
- Explains all the IT procedures to you
How do Surrender a Professional Tax Registration Certificate?
Below we have mentioned the process which will help you to understand how to Surrender a Professional Tax Registration Certificate. They are as follows:
- Make the cancellation application online by logging into your account.
- Make a copy of the Acknowledgement.
- Submit the following document to the department.
- Cancellation application with a court cost of 5 Rs. Stamp
- Original Professional Tax Certificate c) Original Challan Copy d) Letter of Authority in favor of the person attending the department e) Closure proof (bank statement, Previous year financial, Salary Register, etc)
- After you have submitted all of the required documentation, the department will cancel the certificate in 30 days; you can check the status online.
- Keep in mind that you must complete the essential return until the department cancels it.
The employer deducts professional tax from a payment that is later eligible for subtraction from the calculation of taxable income. Employers and business owners must get registration with regard to Municipal Corporation. The tax rate and registration process differ because it is a state-based registration.
To meet all the documentation needed to register for a professional tax can be a laborious procedure. We are here to assist because of this. At InstaSpaces, we have industry experts who will help you in this complex process. The burden of compiling all the papers and wondering if you meet the standards can be lessened with the assistance of our experienced legal team.
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