What is Professional Tax? Meaning, Rates, Applicability

Professional Tax is the type of tax levied on all individuals who earn a living through a medium. However, the fundamental difference between other types of taxes and Professional Tax is that the Central Government levies other taxes; however, Professional Tax is levied by the State Government. Due to this, different states levy different Professional Tax rates on Professionals.

Professional Tax is not levied only on professionals, indicating people such as doctors or Engineers. It is to be paid by every individual earning in that particular State, subject to the monetary threshold applied and implemented by the respective states. On the other hand, various States do not charge professional tax.

Professional Tax- Slab Rates

The tables below indicate the current Professional Tax rates in major states:-

1. Maharashtra

2. Karnataka

3. West Bengal

4. Madhya Pradesh

5. Tamil Nadu

6. Andhra Pradesh

7. Gujarat

Professional Tax Certificate:

There are two types of Professional Tax Certificates:-

• PTEC (Professional Tax Enrolment Certificate)- This is obtained when the tax is paid by the business entity as a whole (i.e. Private/Public Limited Company, Sole Proprietor), or by a business owner
• PTRC (Professional Tax Registration Certificate)- This is obtained when a Government or Non-Government employer deducts the tax from the employee’s wages and deposits the same to the respective State Government.

When a professional starts working in an organisation, it is advisable to obtain the registration certificate from the respective place. Professional Tax becomes applicable once the professional starts working within 30 days of starting the profession.

Professional Tax Payment- Who pays the tax?

In the case of employees on the salary roll of an organization, the employer is responsible for deducting the Professional Tax from the Employee’s salary monthly (according to the applicable tax rate)- and depositing the same with the respective State Government. The employer needs to get a Registration Certificate from the concerned authority to deposit the deducted professional tax.

On the other hand, in the case of Self-employed individuals, they are responsible for paying the professional tax to the State Government. The Commercial Taxes Department of the State is the agency/authority which collects professional tax based on applicable tax rates and slabs. The Taxpayer needs to obtain the Certificate of Enrolment from the prescribed authority.

Online Registration for Professional Tax

The different states have their respective state websites, through which a person or a business can register for payment of Professional Tax. You can register yourself online for the payment of Professional Tax on your respective State’s website. You will require the following documents:-

1. Certificate of Incorporation (including MoA and AoA/ LLP Agreement),
2. PAN Card of company/LLP, attested by a company director,
3. Proof of office location with NOC from the owner of the premises,
4. Proof of company bank account with the bank statement and a cancelled cheque,
5. Passport size photograph, address and identity proof from all the directors,
6. Board resolution/ statement of consent by the parties,
7. Shop and establishment certificate, and
8. Salary and attendance register.