What is Professional Tax?

Professional tax is a state-level tax imposed on the income of salaried individuals and professionals such as doctors, lawyers, engineers, etc. Employers deduct professional tax from their employees’ salaries and remit it to the state government. It is levied by the State Governments in India, on occupations such as salaried employees, advocates, chartered accountants and so on. States have different rates for professional taxes.

Who Collects Professional Tax?

Professional tax is collected by the state governments. Each state has its own method of collecting professional taxes, which may include online payment portals, as well as forms that need to be completed and submitted.

Who is Responsible for Deducting Professional Tax?

Professional tax is deducted by the employer. The employer must collect the tax from the employee’s salary and deposit it to the government. The amount of professional tax to be deducted and applicable rates vary from one state to another.

Professional Tax in Maharashtra

Professional tax is a tax levied by the state government of Maharashtra on the income earned by way of profession, trade, calling or employment. Professional tax is collected by the local Municipal bodies and the revenue is shared by the state and local bodies. Professional tax applies to all individuals earning an income in the state of Maharashtra, and it is the employer's responsibility to deduct the professional tax from their employees and deposit it with the local municipal body. The rate of professional tax in Maharashtra is Rs. 200 per month for salaried individuals and Rs. 2500 per annum for self-employed individuals.

Who is Exempted From Profession Tax?

In India, small-scale businesses and professionals with an annual turnover of up to Rs. 5 lakh are exempted from paying Professional Tax. Professionals such as doctors, engineers, lawyers, chartered accountants, architects, and other professionals who have been registered with the appropriate authority are also exempt from paying Professional Tax.

Applicability of Professional Tax

Professional tax is applicable on all sorts of professions, trades, callings and employments, but the rate of tax varies from state to state. In general, it is the employer's responsibility to withhold professional taxes from employees' salaries and pay them to the appropriate authorities.

What is the Indian Professional Tax Maximum Limit?

The maximum limit for professional tax in India is Rs. 2,500 per annum.

What is the Procedure to Pay Profession Tax?

The procedure to pay profession tax varies from state to state. Generally, the process involves obtaining a registration certificate, filing returns, and making payments. Here are the general steps:

1. Obtain a registration certificate: Profession tax registration is done with the state government. The business must apply for a registration certificate. The application should include the company's name, address, contact details, and PAN (Permanent Account Number).

2. File returns: Profession tax returns should be filed on a periodic basis. The frequency and due date of filing depend on the state. Returns should include details such as total taxable income, deductions, taxes due, and other relevant information.

3. Make payments: Profession tax payments should be made within the due date to the relevant state authorities. Both online and offline payment methods are available.

Professional Tax Registration and Returns

Professional tax registration is a state-level tax imposed on working individuals. It is applicable on all income earned from employment, including salary, wages, fees, commission and bonus income. The registration process and return filing are handled by the respective state government. It is mandatory for individuals earning a salary above the prescribed threshold to register and file returns every month. The amount of professional tax payable by an individual depends on their income and is decided by the state government.