What is P Tax?
Updated on : 2020-Nov-25 12:05:58 | Author :
Professional Tax: All You Need to Know
When you take a look at your payslips, you'll notice a small deduction mentioned on that, together with the opposite components like HRA, conveyance and basic salary break ups. This deduction is sometimes around Rs. two hundred and is termed as professional tax. Generally, this type of tax varies from state to state and in certain places, you'll realise that there's no deduction created under this heading. Let’s begin by answering the foremost basic question- “What is professional tax?”
What is Professional Tax?
Professional tax is outlined as a tax that's levied by a government on all people who earn a living through any medium. This must not be confused with the definition of different professionals like doctors or lawyers. This is a type of tax that must be paid by every and each individual earning income. The calculation of this tax and also the amount collected differs from one state to a different. The limit has been set to Rs. 2500 per annum.
Why does professional tax vary for different people?
Since professional tax is levied by the state government, it tends to take issue for varied states. Every state declares a block and also the professional tax is subtracted on the premise of those slabs. There are some states and union territories in India that don't charge professional tax too. It’s paid by dividing the annual professional tax due into twelve equal installments, that are to be paid each month. February, as a month, is an exception wherever the tax is higher than the other months.
There can be things wherever sources of financial gain falling under different sectors are responsible for a separate tax. To cite an instance, in some states, an individual running a business within the transport business can be at risk of pay a professional tax of about Rs. fifty every year for each vehicles he owns. This might be subject to a cap of Rs. 1,000 every year.
Who collects this tax?
Employers collect a definite amount as professional tax from the monthly salaries of their staff. This portion is then paid by the employer to the govt. just in case they fail to try and do thus, they'll be subject to penalties for not aggregation or failing to pay the professional tax. Also, if you are doing it for anyone, then you're at risk of pay the professional tax yourself.
If you are a professional who does not work with AN employer, you will pay your professional tax by registering for it by applying through a form. As soon as you receive the form, a registration number will be issued. Payment of the professional tax will be created under these registration numbers at banks. It’s vital to notice that, in some states, the govt provides rebates on the taxes if it's paid in a lump sum for a couple of years together. This can be done thus it's worth enquiring concerning the rules of professional tax in your state.
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