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Professional Tax, as the name suggests, is a tax imposed by the State government on all salaried people. Professional tax registration is required for people engaged in any form of profession. This Tax applies to all types of working professionals, such as doctors, chartered accountants, and lawyers. If the income of business owners and freelancers crosses a threshold set by the State Government, then they are also liable to pay this Tax. The Professional Tax is a source of income for the state. Some states such as Delhi, UP and Haryana are exempted from this Tax. The tax rates are different in different states. The maximum amount of Professional Tax that can be imposed is Rs.2,500 annually.
In this case, the employer should obtain a registration certificate for professional Tax from the authorities.
In the case of a salaried employee, it is the employer’s responsibility to deduct the professional Tax from the salary and pay it to the authorities, or for a self-employed individual, it is their own responsibility.
Yes, in some states, it is possible, like, in Maharashtra, one can pay up to 10000 instead of 2500, and their professional Tax will be paid for five years.
Professional Tax is a state-imposed tax on salaried individuals, including employees and professionals. It’s mandatory to ensure compliance with state regulations and contribute to government revenue.
All employees working in a company, irrespective of their designation, are required to register for Professional Tax in India.
Companies have a one-month window from the day of incorporation to complete their Professional Tax Registration.
Professional Tax is debited at predetermined slab rates, and the frequency of payment can be either monthly or annually, depending on the state’s regulations.
Professional Tax is a state-specific tax, and the rates and regulations may vary from one state to another.
Startups can ensure timely compliance by staying informed about state-specific regulations, working with professional consultants, and utilizing the one-month window for registration.
Non-compliance may result in penalties and legal consequences. It’s crucial for businesses to adhere to Professional Tax regulations to avoid any financial or legal issues.
Freelancers and self-employed professionals are not exempt from Professional Tax. All individuals earning a salary are obligated to register and pay Professional Tax.
Exemptions and deductions may vary by state. It’s advisable for businesses to consult with tax experts to understand any available benefits or concessions.
Employees can review their salary slips or consult with their HR department to confirm if Professional Tax is being deducted. Employers are required to provide transparent information to employees.
Professional Tax rates are typically fixed slab rates and may not vary based on income levels. However, it’s essential to check the specific regulations of the state in which the business operates.
No, it is mandatory for businesses to complete Professional Tax Registration. Operating without registration can lead to legal consequences and penalties.
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