In India, state governments levy professional tax on people practicing certain professions. This tax is a direct tax that is payable by those who earn salary through their profession. In most states, professionals must pay a certain percentage of their income as professional tax. This tax is typically between 2% and 4% of their salary.
If you are self-employed, you can register for professional tax by filling out a simple form and obtaining a registration number. Once registered, you can pay the tax online or at a bank. Some states also provide a rebate if you pay the tax in lump sum. Make sure you understand the rules of your state before filing for professional tax.
There are two lists of taxes in India. One is the Union List, and the other is the State List. The Union List is made up of taxes imposed on income. The state list is the list of taxes that the state government collects. Article 276 of the Indian Constitution assigns the duty of collecting the professional tax to the state. As a result, professional tax varies across states.
The professional tax rate varies from state to state, and depends on your occupation and income. As a business owner, you are responsible for deducting this tax from employee salaries. Once collected, you pay the tax to the appropriate government department. You must also furnish a return to the tax department in a prescribed form within a specified period.
While professional tax is mandatory in India, some states do not require it. If you work in these states, you can avoid paying this tax. However, if you do not pay it on time, you will have to pay a penalty. For example, if you do not have a certificate of registration, you will have to pay Rs. 2,500 a year. If you do not pay the tax on time, you will have to pay a penalty of up to 10% of the total amount of the tax you owe.
When you are required to pay professional tax, you need to register for the act in your state. The Maharashtra State Tax on Professions Act, also known as PTEC, governs this tax. You can apply for a certificate of registration for your company if you have more than one location in the state. The tax return deadline for this registration is 30 days after you are notified that you must pay your taxes.
A professional tax is an income tax based on the income that a person earns through a trade, profession, or employment. This tax is generally imposed on individuals who earn income through their profession, including employees and independent professionals.