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Sunday, September 25, 2022

Professional Tax in India

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Professional Tax Payment

If you are working and get a regular wage, you must pay professional tax. You’ve probably even seen the phrase “professional tax” on your monthly pay stubs. It appears beneath your gross income, allowances, and HRA. Professional tax, together with TDS, EPF, and any additional deductions, is collected from your total income. Nevertheless, this tax does not apply solely if you’re a professional practitioner like a doctor or lawyer. You are required to pay this tax if you receive a salary.

A professional tax is a state government tax placed on all persons who earn their livelihood through whichever media. This is not to be confused with the notion of professionals, which refers to persons such as physicians. This is a tax that must be payable to everyone who earns money. The computation and sum levied vary by state, however, there is a cap of Rs. 2500 annually.

Why there is a difference in Professional Tax for Different Individuals?

Because it is a state government tax, it varies from one region to the next. Every state establishes a slab, and the professional tax is collected depending on such slabs. Professional tax is not levied in all states or union territories. It is payable by splitting the yearly professional tax owed into 12 equivalent monthly installments, with the exception of February, which would be larger than the other months.

There could also be instances when revenue sources from various industries are subject to distinct taxes. In some states, for instance, an individual conducting a transportation business may be obligated to pay a professional tax of around Rs. 50 per year for every automobile owned, with a ceiling of Rs. 1,000 per year.

Who is Responsible to Collect Professional Tax?

Employers deduct professional tax from their employee’s monthly salaries. Organizations then submit it to the state, without which they could face fines for failure to obtain or submit the professional tax. If you do not work for someone else, you must submit the professional tax personally.

Individuals who are not employed by a company might apply for it by submitting a form. As once paperwork is submitted, the applicant will be assigned an identification number. Professional tax can be paid at banks using these registration numbers. It is also important to note that in certain jurisdictions, the government offers tax refunds if the taxes are paid in a single payment for upcoming years as well, so it is worthwhile to inquire about professional tax regulations in your region.

Professional Tax in India, like any other direct tax, has a calculation, and the bracket amount is determined by the particular state or union territory. As per Article 246 of the Constitution, solely Parliament has the authority to enact legislation for topics on the Union List, which covers income tax.

Nevertheless, in the instance of the State and Union categories, the state can make professional taxation voluntary in India. As a result, most Indian states and union territories charge professional taxes as a source of income. The Commercial Tax Department of each state collects professional tax in India. The professional slabs amount differs in every region.

West Bengal, Maharashtra, Gujarat, Andhra Pradesh, Kerala, Tamil Nadu, Karnataka, Bihar, Assam, Madhya Pradesh, and other states in India currently levy a professional tax.

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