Why is profession tax deducted

Each and every individual living within a particular state and earning an income is eligible to pay this tax. Since the State government levies this tax, its computation varies in different states. Hence, for several individuals, the professional tax is deducted from their salary. Professional Tax comes under the jurisdiction of state governments, and not under the control of the Central government.

Therefore, there is no single law that explains how to calculate this tax for the entire country. Rather, every state government has a body that frames laws regarding the collection of Professional tax. As mentioned above, the center has only specified what is the maximum amount that may be collected in a given year. Therefore, the rest of the rules related to the collection of professional tax are made by the respective state governments. Hence, each state has its own professional tax slab rates, and so the tax is calculated based on these slabs.

Also, certain states and Union Territories in India do not charge Professional tax. Get Professional Tax Registration. Furthermore, the entire tax for a year is split by 12 into equal installments which the individual pays every month.

The product uses a direct deposit model similar to any payment wallet where the user maintains a balance. The payroll expenses are automatically deducted from such balance as on the respective due dates. There is no need to spend time and manual efforts on maintaining employee records, their PT contribution, and payment to concerned authorities once a RazorpayX Payroll account has been set up. Set your RazorpayX Payroll account now. Professional tax is a state subject.

There is no fixed procedure to pay professional tax. It can be paid either online or offline modes depending on the state from where the business is operating. Also, the intervals and procedure for filing professional tax returns depend on the State. The actual penalty depends on the respective State professional tax laws. Businesses might have to pay penalty, late fee or interest for non-registration, delay in tax payments and non-filing of returns within the specified due date.

For instance, the Karnataka state government charges an interest of 1. The following individuals are exempt from paying professional tax:. Any failure to obtain professional tax registration or depositing dues to the concerned authorities might land employers and professionals in trouble.

With RazorpayX Payroll, you, as an employer, can avoid all such consequences. The product will take care of all your professional tax dues payment and their return filing on time ; leaving no scope for default with statutory compliance requirements. Since professional tax is levied by state governments, it tends to differ for different states. Each state declares a slab and the professional tax is deducted on the basis of those slabs. All types of companies come under the purview of Professional Tax, from Private Limited companies to one-person companies, partners of Limited Liability Partnerships to partnership firms, and even sole proprietors.

It is advisable for all such entities to apply for Profession Tax registration immediately upon incorporation. Related: How advance tax can help you stay on track with tax payments. It is not as if only those working in an organisation on a regular salary are liable to pay Professional Tax.

Even if you do not work in a company or have an employer, but still earn an income, the responsibility of paying Professional Tax is yours.

According to the Professions, Trades, Callings and Employment Act , all professionals enjoying a monthly income above a certain level are liable for Professional Tax payment. Freelance professionals also must register for paying Professional Tax by applying on a special form, following which the applicant will be given a registration number. Professional Tax can be paid under these registration numbers at banks.

Since the rate of Professional Tax varies from state to state in India, you must be aware of the prevailing rate in your particular state, especially if you are an independent professional.

It is also advisable to consult a Chartered Accountant or tax consultant before paying anything under this head as the tax slabs can vary from year to year. Incidentally, some states also provide tax rebates if Professional Tax is paid in a lump sum for a few years together.

This also makes it important for you to be aware of this condition and other rules surrounding professional tax registration in your state. Related: Property tax: When does it apply to you? Related: Everything you need to know about the GST return forms.

If the information provided at the time of enrolment is found to be incorrect or false, the penalty is three times the tax amount due. Related: Components of your salary and their tax benefits [Infographic].

As is the case with all types of taxes, the rules governing Professional Tax can vary over time, and it is advisable to check the current rules from a tax consultant before paying Professional Tax. One can also register for Professional Tax payment online. How well versed are you with your salary components?