Professional Tax Registration

What is Professional Tax?

Professional tax is a state-level tax that applies to salaried employees and professionals, including chartered accountants, lawyers, and doctors.

Professional tax has to be paid compulsorily by every member of staff who is employed in any private firm operating in India. All business owners must register for professional tax and take up responsibility for deducting professional tax and paying for it.

The rate of professional tax varies from state to state. The state governments which are levying state tax are West Bengal, Maharashtra, Karnataka, Kerala, Assam, Madhya Pradesh, Orissa, Tripura, Meghalaya, and Gujarat.
Any professional who earns a regular monthly income must pay this tax. Even those offering professional freelance services must pay professional tax using a special form. They must first get a registration number and then pay their taxes in the corresponding banks using the number.
The following individuals are exempted from professional tax:
– Parents of children with a permanent disability or mental disability.
– Members of the armed forces, including members of auxiliary forces or reservists, serving in the state.
– Individuals, over 65 years of age.
– Physically challenged individuals
– Women exclusively engaged as agent under the Mahila Pradhan KshetriyaBachat Yojana or Director of Small Savings.
– Parents or guardians of individuals who are mentally challenged
– Badli workers in the textile industry.

Why should I pay Professional Tax?

  • It is required as per the rules and regulations of the country. Every employee is bound to make the professional tax payment and employers in many states of India are strictly bound to obtain the registration of professional tax. Post registration, they have to make the deductions and pay service taxes of all the employees who work under them.
  • Paying Professional tax avoids penalties. Failure in professional tax registration results in huge penalties that keep building over time.
  • Ease of Compliance. Professional tax registration and compliance is very easy. The registration procedures are not time consuming and the further proceedings are also easy.
  • The amount of professional tax paid in a year can be claimed as deduction from salary.

Proofs required for Professional Tax Registration

  • Certificate of Incorporation, including either MOA & AOA or LLP Agreement.
  • PAN card of Company attested by the company director
  • Address proof for the office along with a NOC from the owner
  • Bank account of the company including bank statements and cancelled cheque.
  • Passport size photographs, address and ID proof from all the directors
  • Statement of consent by the partners.
  • Shop and establishment certificate
  • Salary register and attendance register