FAQs on Professional Tax

What is Professional Tax:  Professional taxes are indirect taxes collected by State governments on individuals practicing professions such as lawyers, chartered accountants, doctors, company secretaries, and so on.

Why do professionals need to be registered for taxes?

Registration for professional tax purposes is a simple process that needs to be completed within 30 days of hiring the staff. The application needs to be submitted per jurisdiction if the work location differs from the place of employment.

A professional tax return filing registration online process makes the entire registration process straightforward

FAQs on Professional Tax

1. Does the Union Territory also have a professional tax?

The Professional Tax is a direct tax imposed by the states instead of the central government. Since the Union territories are under the Central Government, they are not subject to the professional tax.

Thus, none of the 9 union territories; Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Jammu and Kashmir, Lakshadweep, Ladakh, or Puducherry must pay.

This tax does not apply to most of these areas since they are small and contribute little to the economy.

2. Professional taxes must be paid, right?

It is compulsory to pay professional tax if you are a salaried individual. That is, if you receive a regular salary.

Depending on the state you reside in, the amount that you will be required to pay towards your professional tax will differ. Each state has different tax slabs ranging between $200 and $2500.

You are not required to pay the tax in the following cases

  If you earn less than the relevant state’s slab rate

  In states/UTs where the professional tax does not apply

  If you are exempt

3. Freelancers are subject to professional taxes?

There is also a professional tax applicable to freelancers. However, if your income is greater than the minimum prescribed limit in the state you reside in, then you need to pay it.

4. What is the procedure for filling out a Professional Tax Application form?

For assistance, you can visit the official website of Professional Tax, which is linked here for your convenience.

5. Who shall obtain the Professional Tax Registration?

The owner of a business or profession is responsible for obtaining a registration. The business owner/employer is required to deduct the professional tax based on the professional tax slab from the salaries of employees and pay the same to the government before the 15th of each month or quarter as applicable.

6. How does the enrolment certificate work?

This registration is also called the Professional Tax Enrolment Certificate (PTEC), which is obtained by employers so that they can pay taxes.

7. Registration certificates are what they sound like, right?

Upon appointing an employee, the employer must obtain the registration in order to deduct professional tax from their salaries. The registration must be obtained within 30 days of the employee being employed.

8.Professional Tax is applicable in which states?

The following states have levied professional taxes:

In addition to them, Punjab, Bihar, Karnataka, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Sikkim, Kerala, Meghalaya, Orissa, Tripura, and Madhya Pradesh fall under this role.

9. Can you tell me how much Professional Tax I need to pay?

This tax is calculated based on the employee’s gross income and is deducted from his or her income each month. The maximum amount payable is 2,500 dollars per year.

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