Professional Tax Registration (P Tax)


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    What is Professional Tax(P Tax)?

    The professional tax is a tax that all salaried persons must pay to their respective state governments. Every working professional, including certified public accountants, attorneys, and medical practitioners, is subject to a professional tax. The individual's occupation, trade, or profession is considered when calculating the amount due. Although tax rates vary from state to state, the maximum annual sum collected from professionals as a form of tax is £2,500.

    Who can Pay Professional Tax?

    The professional tax applies to all kinds of crafts and professions collected from such businesses in India. Every worker hired by a private company in India must make the payment, regardless of the company they work for. Every company owner is responsible for registering their company for professional tax, as well as taking on the task of deducting professional tax and making payments for that tax.

    Tax on professional income for those who are self-employed

    Any self-employed professional who receives a regular monthly payment must pay the professional tax. When we use the term “professional," we refer to those who are gainfully engaged in highly specialized professions such as accounting, media, etc.

    p tax registration (professional tax)

    Paperwork Required For Professional Tax Registration

    1. Certificate of incorporation, containing a memorandum of association and agreement to form AOA or LLP.

    2. PAN card of the firm or LLP with the director's signature affixed to it.

    3. Proof of office location together with a no objection certificate from the building's owner.

    4. Documentation of the company's banking status, including a bank statement and a blank check.

    5. Proof of address and identification, together with a picture of the size of a passport, from each of the directors.

    6. Resolution of the board of directors and a declaration of agreement from the partners.

    7. Certificate for the store and the establishment.

    8. Registers for both salaries and attendance were kept.

    Process For Online P Tax Registration(Professional Tax)

    Step 1: The Permanent Account Number (PAN) card, an address, and identification proof must be submitted to each firm's director, partner, and owner.

    Step 2: Personal information must also be provided.

    Step 3: The workers are responsible for filling out the application form for professional tax registration.

    Step 4: Our LegalTaxPert experts will send it off to the relevant authorities for verification.

    Step 5: We will send you a fundamental acknowledgment within 5-7 business days after we receive it.

    Step 6: The physical copy of the registration will be distributed over the next 10 days in all of the main cities.

    Step 7: The required time may be between 15 to 20 working days in various locations.

    Reasons to Pay Professional Tax

    The following is a list of the primary reasons why one should never miss a payment on their professional taxes:

    • Avoid paying finesIf a business or individual fails to register for tax purposes, they risk incurring severe penalties that only worsen over time.
    • Simple to adhere to – The requirements for professional taxes are straightforward. The processes for registration may be completed quickly, and the subsequent procedures are made much more straightforward.
    • Deductions – It is possible to claim deductions from one's pay based on the amount of professional tax paid. The taxpayer will be eligible to take the assumptions in the tax year corresponding to the year in which the payments were made.
    • Taxes levied by the state government – Both the local authorities and the state government have the power to collect all of the professional taxes that are dependent on employment, professions, trades, and a great deal more. The professional tax collected each year should not be more than Rs.2500, and it should not exceed this amount.

    Who Is Excluded From Paying Professional Tax?

    A few persons are excluded from the professional tax requirements; the exemptions vary depending on which state you are a resident of. The following persons are exempt from paying taxes according to the professional tax rules:

    • Parents whose children have a mental impairment or a permanent handicap.
    • Personnel of the various armed forces.
    • People who are permanently handicapped.
    • Parents or guardians of persons who suffer from mental retardation.

    Rate Applicable To Professionals

    The highest amount of professional tax that a person is required to pay is Rs.2,500. In most cases, the amount of the slab is determined by the professional's total annual salary. It is the responsibility of the employee's employer to deduct it from their paycheck every month.

    In India, the following state governments are responsible for collecting professional tax:
    Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Orissa, Tripura, and Madhya Pradesh.

    The employee's income or earnings must be increased by the same amount the employer deducts as professional tax. The employer must then deposit that amount with the state government.

    FAQs(Frequently Asked Questions)

    How is professional tax calculated?

    A professional tax is calculated based on the salary and predetermined slabs of the employer. You can pay anything between Rs 200 to Rs 2500 a month as per slab.

    How much professional tax is deducted from my salary?

    The maximum amount of professional tax that can be charged from any employee is Rs.2500 and it is usually deposited from the employee’s salary to the state government.

    Is it mandatory to pay professional tax?

    Professional Tax is charged as per Section (3) of the Income Tax. Few states like Haryana, Rajasthan, and Arunachal don’t charge this tax.

    Why is professional tax different in every state?

    As professional tax charged by the State Government, that’s why it varies from one state to another. Each state has its own rules and regulations.