What is Professional Tax?
• Professional tax is levied by state government
on the income earned by the way of
profession, trade, calling or employment.
• The power to levy professional tax has been
given to the states by way of clause (2) of
Article 276 of the constitution of India.
Article 276 in Constitution of
India,1949
•
•
•
(1) Notwithstanding anything in Article 246, no law of the Legislature of a State relating to
taxes for the benefit of the State or of a municipality, district board, local board or other local
authority therein in respect of professions, trades, callings or employments shall be invalid on
the ground that it relates to a tax on income
(2) The total amount payable in respect of any one person to the State or to any one
municipality, district board, local board or other local authority in the State byway of taxes on
professions, trades, callings and employments shall not exceed two hundred and fifty rupees
per annum: Provided that if in the financial year immediately preceding the commencement
of this Constitution there was in force in the case of any State or any such municipality, board
or authority a tax on professions, trades, callings or employments the rate, or the maximum
rate, of which exceed two hundred and fifty rupees per annum, such tax may continue to be
levied until provisions to the contrary is made by Parliament by law, and any law so made by
Parliament may be made either generally or in relation to any specified States, municipalities,
boards or authorities
(3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on
professions, trades, callings and employments shall not be construed as limiting in any way
the power of Parliament to make laws with respect to taxes on income accruing from or
arising out of professions, trades, callings and employments
Deduction U/s 16 of Income Tax Act
• Any amount paid to state government as
professional tax is allowed as deduction under
section 16(iii) of Income tax Act.
• Section 16(iii):• 1)Deduction is available only in the year in which
professional tax is paid.
• 2)If professional tax is paid by employer on behalf
of employee, then first it is included in the salary
of the employee as a “Perquisite” and then the
same is allowed as deduction on account of
“Professional Tax” from gross salary.
....Section 16(iii) of Income tax Act
• 3)There is no monetary ceiling under Income
tax Act(under the Article 276, State
government cannot impose more than Rs
2500 Per annum as professional tax).Whatever
professional tax is paid during the year is
deductible.
Deducted and Paid By?
• In case of salaried and wage earners, the
professional tax is liable to be deducted by the
employer from the salary/wages and the same
is to be deposited to the state government.
• In case of other class of individuals, this tax is
liable to be paid by the employee himself.
Professional tax Rates
• If you are salaried employee earning above Rs.12000
per month then you are liable to pay Rs.200 per
month. The Annual Professional Tax is Max Rs.2500.
Monthly Salary or Wages
Tax Rates
Up to Rs 5999
Nil
Rs 6000 to 8999
Rs 80 Per Month
Rs 9000 to 11999
Rs 150 Per Month
Rs 12000 and Above
RS 200 Per Month
Profession tax Return/Payment Due
Dates
Particulars
Payment Type
Return Filing
Type
Payment Due
Date
Return Filing
Date
More than 20
Employees
Monthly
Monthly
Within 15 days
from the end
of the month
A monthly
return in Form
No.5 is to be
filed by 15th of
next month
Less than or
Equal To 20
Employees
Monthly
Quarterly
By the 15th of
next month
from the end
of the quarter.
Annual return
in Form
No.5AA
Deduction of salary by Employer
• The Employer is required to deduct the
amount of tax from the salaries of all
employees except those who are drawing a
salary of less than Rs.6000/- per month
REGISTRATION
• The Employer has to get registered even if he
is responsible to deduct tax from the salary of
one employee.
• Form No 1 is the Application form for
Registration.
• The time limit for registration is 60 days from
the date of accruing liability under the Act.
• The Employer has to get separate registration
for each of his Branch.
Deposit of Amount Deducted
• Employers covered under the jurisdiction of “State
Government” as Designated authority shall pay in the
treasury by Challan through the bank. Other employers shall
pay at the place of payment declared by the Designated
Authorities concerned.
• If an employer has employed more than 20 employees, he is
required to make payment within 15 days from the end of the
month. However, if an employer has less than 20 employees,
he is required to pay quarterly(i.e. by the 15th of next month
from the end of the quarter).
INTEREST
• Fails to get Registration
1. ) He will be liable to a penalty of Rs.20/- per day under Section 5(5)
for the period during which he remains unregistered.
• Fails to Deposit to the Government/ Late Deposition
1) He is liable to pay interest at the rate of 18 % per annum for such
delayed period along with penalties prescribed.
• Non Deposition of Amount.
1) The officials have power to recover such amount along with
applicable penalty and interest from the assets of such defaulter.
Moreover they can attach his bank account also. In serious cases,
prosecution case (police case) also can be filed.
RETURN FILING
• A monthly return in Form No.5 is to be filed by 15th of next
month, if the number of employees is more than twenty.
Where number of employee is less than 20, only an annual
return in Form No.5AA is required to be filed.
• If Any Registration holder wants to file Annual return then he
can file if he has obtain special permission from the authority
by applying in the FORM 5B for this purpose.
• Link for Form 5 C:\Users\Dipanshu\Desktop\pt form 5.xls
Provision to file Consolidated return for
different for which separate registration are
obtained.
• One has to apply in form 5-CC to the
concerned authority for this purpose. This
facility is available where all the places are
within the jurisdiction of single Designated
Authority.
Assessment
• Employers required to pay tax, are liable to be
assessed by the Profession Tax authority
under Section 7 of the Act.
Thank You