HOW IS PROFESSIONAL TAX CALCULATED?

Some points to be remembered regarding the calculation and deduction of Professional Tax:

Professional Tax is deducted under the provision of Section 16 (iii) of the Income Tax Act. Professional Tax is deducted from one’s income or salary before deduction of Income Tax. Hence, it appears at the top of the salary slip and this can be shown as a deduction while filing Income Tax returns. Professional Tax is categorized as an indirect state tax. Professional Tax acts as a source of revenue for the state governments which have imposed this and is utilized for the general development and welfare of the state. Professional Tax is also utilized by the respective State Governments for the purpose of building infrastructure in order that one can smoothly carry out his / her profession in a particular state.

For any company, there should be a submission of a separate application for each of its branches, that is, each branch office of a particular company should obtain separate registration for Professional Tax. Professional Tax, for any individual, depends upon his / her annual gross income. Amongst the states and union territories that have levied Professional Tax, some charge it as a percentage on the annual gross income while some charge it as a fixed amount which is deducted on the basis of some predetermined tax slabs. In this way, Professional Tax is different for different persons and also differs from one state to another. Thus, there is no fixed method of calculating Professional Tax. It depends on the concerned state government as to how it is to be charged.

Profession Tax Payment Certificate (PTPC):-

When Professional Tax payments are up-to-date, i.e., Professional Tax has been paid for all the previous financial years and the current financial year, then Profession Tax Payment Certificate (PTPC) can be generated, for some states. For example, Profession Tax Payment Certificate can be generated in the state of West Bengal. In West Bengal, the provision of Profession Tax Payment Certificate has come into effect from 1st July 2015, under Section 6C of the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979. It must be noted that any tax-paid challan cannot be treated as a substitute for Profession Tax Payment Certificate (PTPC). This certificate can be generated electronically from the official website www.wbcomtax.gov.in. Now, Profession Tax Payment Certificate (PTPC) is compulsory to be generated by any –

• Government or
• Local Authority or
• A Body Corporate established by or under any Central or State Act or
• Any other person / entity / authority as may be declared by the State Government, before –

• Placing an order with, or purchasing any goods or services from any person who has a liability to pay Professional Tax, or
• Before making any payment to such person for any such purpose, or
• Before entering into any contract with any such person, or
• Before making any payment to any such person, or
• Before renewal of any license issued to any such person