Currently Professional Tax in not levied in all the States of India. Its Being State Subject, only few States have imposed the Professional Tax. The states which impose professional tax are Punjab, Uttar Pradesh, Karnataka, Bihar, West Bengal, Delhi,Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, Jharkhand and Sikkim, Mizoram.
Its New Act levied by Punjab Government in the year 2018, by enacting new Act named as Punjab State Developmental tax. Now, Every employee or person doing business or profession in Punjab is liable to development tax if Taxable Income (Income after deduction of 80C etc) is above maximum exemption limit as per Income Tax Act i.e. Rs. 2, 50,000/- at present. Income to be seen is of same year for which development tax is to be paid. i.e. to pay development tax of FY 2018-19, Income of same year i.e. FY 2018-19 is to be seen. Section 4 also mention ‘Income tax payee’ which creates confusion as individual with Total Income above Rs. 3, 00,000/- is income tax payee in Income Tax Act. Punjab State Govt should clarify the same. At present, we are assuming 2, 50,000/- is cutoff amount to check applicability in below examples.
Exempt persons from Punjab State Developmental Tax - Senior Citizens, Persons exclusively engaged in Agricultural activity, Every business operated in Punjab state is liable for the same. No exemption will be allowed just because Head office is in different state. Central Govt Offices, State Govt Offices, Defense, Railways all are also covered.
Under this Act, In case of employee, employer will deduct tax from salary @ Rs. 200 per month and make payment to Govt. In case of person engaged in business or profession, he shall be liable to register u/s 6 and pay taxes of Rs. 2400/- annually. Person includes Individual, Firm, company etc so all are required to pay tax as per Act but registration as tax payer is allowed by portal for individuals only. Partners shall be liable to register themselves if applicable because they are not employees of firm. Directors if withdrawing salary will not be required to register as company will deduct as employer. If an employee is employed from more than one employer then he can choose one employer or register himself u/s 6 under this act and give declaration to other employers and designated officer in Form PSDT-5.
Existing Businesses shall within 60 days from date of Act (for New Businesses within 30 days), registration should be taken now. Persons who become liable in future due to start of new business or profession or increase in income will have to take registration within 30 days from which they are liable.
Penalty for failure to register can be imposed at Rs. 50/- per day
Return will be filed annually in Form PSDT-6 for employers on or before the 13th April of next year. Tax payers shall also file annual return in Form PSDT-7. Employees whose tax is deducted by employer need not to file any return. Penalty for failure to file returns can be imposed at Rs. 50/- per day.
If you ever take a look at your payslips you will notice that there is a small deduction mentioned along with all the HRA, conveyance and basic salary break ups. This deduction is generally to the tune of INR 200 or so and is called the professional tax. This tax is generally different for each state and in certain place you may notice that there is no deduction made under this heading. So the question is, what is professional tax?
The respective state governments in India levy the professional tax on income from profession or employment. The professionals earning an income from salary or other practices such as a lawyer, teacher, doctor, chartered accountant, etc. are required to pay professional tax. 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. The tax calculation and amount collected may vary from one state to another, but it has a maximum limit of INR 2500/- per year.
Professional Tax Registration is mandatory within 30 days of employing staff in a business or, in the case of professionals, 30 days from the start of the practice. Professional tax needs to be deducted from the salary or wages paid amount. Application for the Registration Certificate should be made to the assesse's state tax department within 30 days of employing staff for his business. If the assesse's has more than one place of work, then application should be made separately to each authority with respect to the place of work under the jurisdiction of that authority.
If an employer has employed more than 20 employees, he is required to make the 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).
Professional Tax Applicable States Across India
The states which impose professional tax in India are listed below:
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