Professional Tax Registration

What is Professional Tax?

Professional Tax is a state-level tax levied in India on individuals earning income through profession, trade, calling, or employment. Governed by the respective State Governments under Article 276 of the Constitution of India, this tax varies from state to state in terms of rates and rules.

Meaning of Professional Tax

• Direct tax imposed by State Governments.
• Applicable to salaried employees as well as self-employed professionals such as doctors, lawyers, chartered accountants, freelancers, and others.
• Collected by employers from employee salaries and remitted to the state government, or directly paid by self-employed individuals.

Who is Liable to Pay Professional Tax?

Key Points about Professional Tax

• The maximum limit of Professional Tax is ₹2,500 per year, as prescribed under Article 276 of the Constitution.
• Payment frequency varies: monthly or annually, depending on the state’s regulations.
• Click on the “Returns” tab
• Not all states impose Professional Tax; for example, Delhi and Haryana do not levy it.
• A separate registration is required for Professional Tax in every state where the business operates.

Penalty for Non-Compliance

Failure to register or pay Professional Tax on time can result in penalties, fines, or interest charges. The specifics vary from state to state but generally include:

• Fines for late registration or payment
• Interest on overdue amounts
• Legal notices and prosecution in severe cases

What Is Professional Tax Registration?

Professional Tax Registration is a mandatory compliance requirement for employers and certain self-employed professionals in states where Professional Tax is applicable. Registration allows:

• Employers to deduct Professional Tax from employees' salaries and remit it to the government.
• Professionals such as doctors, chartered accountants, lawyers, and consultants to pay the tax directly.

Since Professional Tax is governed by individual states, the registration process, rates, and compliance requirements vary by state.

Who Should Register for Professional Tax?

Documents Required for Professional Tax Registration

For Employers:

• PAN card (Company/Proprietor/LLP)
• Address proof of business premises
• Certificate of Incorporation or Registration
• Employee salary details
• Employer ID proof (Aadhaar, PAN)
• Filled Professional Tax registration application form

For Self-Employed Professionals:

• PAN and Aadhaar card
• Business proof such as GST registration, MSME certificate, etc.
• Passport-sized photograph
• Address proof (electricity bill, rent agreement, etc.)

How to Register for Professional Tax? (Online Process)

While the exact process varies by state, the general steps include:

Payment & Filing of Professional Tax

• Payment frequency can be monthly or annual, depending on the state's rules.
• Employers must deduct Professional Tax monthly from employees’ salaries and file monthly returns.
• Self-employed professionals usually pay the tax annually.
• Timely filing and payment ensure compliance and avoid penalties.

States That Levy Professional Tax

Some major states imposing Professional Tax include:

• Maharashtra
• Tamil Nadu
• Karnataka
• West Bengal
• Gujarat
• Andhra Pradesh
• Telangana
• Madhya Pradesh

Note: Some states such as Delhi, Uttar Pradesh, and Haryana do not levy Professional Tax.

Penalties for Non-Compliance

Failure to comply with Professional Tax regulations can result in:

• Penalties for late registration
• Fines and interest on non-payment or delayed payment
• Legal consequences for failure to file returns or pay dues

It is essential to adhere strictly to Professional Tax rules to avoid costly penalties and legal hassles.

VETRI AUDIT SERVICES PRIVATE LIMITED offers expert assistance in Professional Tax registration, compliance management, return filing, and advisory services across multiple states. Contact us to ensure your business meets all statutory Professional Tax requirements seamlessly and efficiently.