Professional Tax
Professional Tax
Professional Tax: a State tax on Businesses & Employees
Professional tax is collected by your State Government. It applicable to Employer and employees or working professionals like self-employed doctors, lawyers who are running own business.
There are two main professional tax
There are 2 main PT in India:-
- Employer PT (Tax on Businesses or Company): This tax applies to companies, businesses, firms and other entities who are registered under the GST. The amount of employer PT in Karnataka is Rs. 2,500. Additionally, separate PT registrations and payments are required for any branches, warehouses, or godowns. Partnership firms also have PT liability based on the number of partners.
- Employee PT (Tax on Salaried person): This tax is deducted from the salary of employees by their employers. The tax rate changes from state to state.
For Karnataka employees:
Karnataka Employee PT Update (Effective April 1, 2023):
As per the notification from Karnataka Act No. 14 of 2023, a new professional tax structure applies to salaried individuals in the state. Here’s the key takeaway:
- For employees with a monthly gross salary of Rs. 25,000 or more: A flat Rs. 200 is deducted as PT.
- For employees with a monthly gross salary below Rs. 25,000: No professional tax.
Need Help with Professional Tax?
For any assistance with professional tax registration, filing, or other issues, contact Team IN Filings in Bangalore.
- Email: team@teamindia.co.in
- Phone: 07019827351
Professional Tax Features
1. It Is A Judicial Requirements
As per the rules and regulations of India, every employee is bound to make the professional tax payment without fail. Employers in many states of India are strictly bound by the judiciary to obtain the registration of professional tax. After the registration, they have to make the deductions and pay the service taxes of all the employees who work under them.
2. To Avoid Paying Penalties
Failure to professional tax registration results in huge penalties that keep on increasing over time.
3. Easy To Comply
When something is easy to comply, it won’t be difficult to follow. The professional tax regulations are so easy to follow that and not difficult to comply with. The registration procedures can be done quickly and the further proceedings are also much easier.
4. Deductions
Deductions can be claimed in the salary on the basis of the professional tax paid. The deductions will be allowed in the year corresponding to which the taxpayer made the payments.
5. The State Government Tax
The local authorities and the state government have the right to collect all the professional taxes based on employment, profession trades and much more. The collected amount of professional tax per annum should not go beyond Rs. 2500 per an annum.
Frequently Asked Questions
In India, Professional Tax is calculated on Salary slabs. Under minimum salary, there is no tax. The maximum amount paid as Professional Tax is Rs.2500 per year. The tax slabs differ from state to state.
Professional Tax appears at the top of the salary slip as it is deducted even before calculating income-tax. The employer deducts it from the salary of the employee and deposits it with the State Government.
Update – Karnataka based employees. As of April 1, 2023 (Reference no: Karnataka Act No. 14 of 2023), there’s a change in how much Professional Tax (PT) gets deducted from your salary. If your monthly gross salary is Rs. 25,000 or more, a flat Rs. 200 will be deducted as PT. This applies even at the starting point of Rs. 25,000, so anyone earning that amount or higher will contribute Rs. 200 towards PT. Remember, for salaries Rs 24,999 and below, PT remains zero.
Professional Tax is a mandatory tax paid by every individual, and there are penalties in case of non-compliance.
The Professional Tax Rules vary from state to state. As the rules vary from state to state, each state can set limits and rates. But the maximum amount limit has been developed to Rs.2500 per year. The salary slab structures for levying Professional Tax differ from state to state.
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