Professional Tax Registration

Professional Tax (PT) is a tax levied by many Indian states on professions, employment and trade. Article 276 of the Indian Constitution allows the state government to levy and collect a tax on professions, trades, callings, and employments. As a result of this, this tax is applicable in certain Indian states, and each state have come out with their own law in this regard, with their own set of registration criteria, tax rates, compliances and exemptions. Therefore, individuals and business entities are required to check beforehand the States where they are required to register themselves or their business under the state’s Professional Tax. 

Professional Tax is applicable in most of the Indian states, including major Indian states like Maharashtra, Karnataka, Telangana, Tamil Nadu, Gujarat, Punjab. It is not applicable in Union Territories including Delhi, and states of Haryana, Uttar Pradesh etc. In case of employment, Professional Tax is deducted by the owner of the business, that is, the employer.

Most states follow a slab system based on the income to levy professional tax rates. As per the Indian Constitution a cap of Rs. 2,500 per year has been fixed. So, states such as Maharashtra levies Rs. 175 per month on those earning between Rs. 5,001 and Rs. 10,000 and Rs. 200 per month on those earning above Rs. 10,001, while state of Karnataka charges Rs. 150 for those earning between 10,000 and Rs.14,999 and Rs. 200 per month on those earning above Rs. 15,000.

What Is The Process?


1) Professional Tax (PT) is a tax levied by many Indian states on professions, employment and trade. Article 276 of the Indian Constitution allows the state government to levy and collect a tax on professions, trades, callings, and employments. As a result of this, this tax is applicable in certain Indian states, and each state have come out with their own law in this regard, with their own set of registration criteria, tax rates, compliances and exemptions. Therefore, individuals and business entities are required to check beforehand the States where they are required to register themselves or their business under the state’s Professional Tax. 

2) Professional Tax is applicable in most of the Indian states, including major Indian states like Maharashtra, Karnataka, Telangana, Tamil Nadu, Gujarat, Punjab. It is not applicable in Union Territories including Delhi, and states of Haryana, Uttar Pradesh etc. In case of employment, Professional Tax is deducted by the owner of the business, that is, the employer.

3) Most states follow a slab system based on the income to levy professional tax rates. As per the Indian Constitution a cap of Rs. 2,500 per year has been fixed. So, states such as Maharashtra levies Rs. 175 per month on those earning between Rs. 5,001 and Rs. 10,000 and Rs. 200 per month on those earning above Rs. 10,001, while state of Karnataka charges Rs. 150 for those earning between 10,000 and Rs.14,999 and Rs. 200 per month on those earning above Rs. 15,000.

Timeline

Being a state governed law/ tax, time taken to secure registration varies from state-to-state, usually within a day to seven days.

Details Required


  • Name, Address, Business Type etc, Phone Number, Email ID of the Applicant
  • Permanent Account No (PAN) of the Applicant
  • Aadhar of the Applicant
  • Total number of Employee working
  • GST Registration details
  • Photograph
  • Bank Account details and proof thereof (Account Statement, Cancelled Cheque)

FAQ

1 What is Professional Tax?

It is a form of Direct Tax levied by many Indian States on Professions, Employment, and Trade. Salaried Employees, Professionals, Traders, Businessman Earning above a set limit are required to pay this tax.

2 In which states professional tax is applicable? In which states professional tax is not applicable?

Professional Tax is applicable in the Indian states of Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tamil Nadu, Telangana, Tripura, and West Bengal.

Professional Tax is applicable in the Indian states of Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tamil Nadu, Telangana, Tripura, and West Bengal.

3 Is Professional Tax Mandatory?

Yes, it is mandatory once applicable on the person/ entity.

4 How is Professional Tax calculated?

Rate at which Professional Tax is calculated to be paid may vary from state-to-state. The total taxable amount will not exceed Rs. 2,500. Most states have certain income slabs to determine the monthly/ quarterly/ yearly Tax rates applicable on them. Typically, someone earning more than 15,000 per month would have to pay Tax at the rate of Rs. 200 per month of full amount of Rs. 2,500 per year. 

5 How is Professional Tax paid?

The Tax is paid to the concerned state department on a monthly, quarterly or yearly basis. In the case of salaried employees etc., the employer is liable to pay the Professional Tax to the state government by deducting the same from the salary. Individual professionals working independently are require to pay the amount on their own.