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Professional tax is a kind of duty that is levied on the earnings of professionals engaged in a mixture of occupations, business owners, and employees of different companies. Professional tax is a state level duty/levy in India. All employees in a private limited corporation have to give this duty.


Professional Tax in India

This state-level duty is levied by various states at various predefined rates. The major states in India that levy this kind of tax include Madhya Pradesh, Gujarat, Tamil Nadu, Karnataka, Maharashtra, Andhra Pradesh, and West Bengal. This type of duty works as a major source of income for the government. There are particular slabs for salaried individuals according to which professional tax is levied on an individual basis. Likewise, there are predefined slabs for revenue or earnings of people belonging to other professions, occupations or businesses, and as per these slabs, taxes are collected from them.


Eligibility of Professional Tax Payers For Income Tax Deduction

People paying this levy meet the criteria to get income tax deductions. As per the section 16(iii) of the income tax act, professional tax on service levied by the state under article 276(2) of India’s Constitution is acceptable for deduction from the income.


Who Pays Tax

An employee pays the professional tax levied on the same, and this is the prerequisite for him or her in order to be entitled for the tax deduction. If an employee does not pay the tax, then there will be no tax-deductions. In case, if the employer pays the professional tax on behalf of his/her employee, then that sum of the amount will be considered as a fringe benefit and the employee will be offered the deduction in taxes.


Slab Rates In Professional Tax

The professional tax slab rates are assessed or evaluated properly on the basis of various entities. The first factor that you have to consider is whether the assessee is a company or an individual. In case, if the assessee is an individual person, in that case, the age and gender of the assessee should be considered to decide the slab rate. The earnings slabs under which the individual falls are also considered in order to assess the slab rates accurately. Income from agriculture need not be considered. Therefore, in India, the income tax for individuals with three slabs is a progressive type of duty.


Organization’s Responsibilities

The companies or organizations have to get a Registration Certificate from the tax bureau of India. By doing this, the organizations will get register with the tax bureau. By this act, the payment will be made in an easy way. However, in case of a firm, the firm needs to get different registration certificate as it is a dissimilar legal entity.


Moreover, return needs to be filed within the last day of a specific month to which it is related and has to include basic details about the wages compensated and deductions in tax. The due date to acquire registration certificate is 30 June while any delay in submitting these returns will invite an interest rate of 1.25% monthly.