What is Professional Tax Registration?

Profession Tax is a state-level tax that applies to salaried employees and professionals, including chartered accountants, lawyers and doctors. The following states impose this tax: Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Orissa, Tripura and Madhya Pradesh. 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. This tax needs to be deducted from the salary or wages paid; the amount varies by state and amount, but is capped at Rs. 2500 per annum.

What You Need To Know

In Every State If you have employees in more than one state, you would need to get a Profession Tax Registration in each state. Even the rate at which it must be paid will vary. This makes it cumbersome for many small businesses to comply with. Do note, however, that many north Indian states do not levy Profession Tax at all.

Filing Returns The frequency of return filing depends on the state you're in. For example, in Maharashtra, returns can be filed annually if the liability is under Rs. 5000, quarterly if the liability is under Rs. 20,000 and monthly if it is above Rs. 20,000. However, in West Bengal, returns need only be filed once every year. This is the approach, in fact, many states are moving toward now.

Penalties Apply A penalty of 10% of the amount owed can be imposed in Maharashtra in case of delayed payment of Profession Tax. A delay in obtaining the Enrollment Certificate will be charged at Rs. 2 per day.