WHAT IS PROFESSIONAL TAX?

Know everything related to Professional Tax

Definition:

An indirect tax imposed on the people of some states of India by their respective state governments is called Professional Tax. Professional Tax allows a person residing in a particular state to carry out his/her profession in that state. Since this tax is imposed by the state government, it is categorized as a state tax. Professional Tax is imposed on all kinds of professions, trades, and employments and not only on professionals.

Professional Tax is charged under Article 276 of the Constitution of India. According to this, any person involved in any kind of profession - be it any business or any job, and even freelancers - need to pay Professional Tax to the concerned state government. The amount of Professional Tax that needs to be paid by an individual depends on the rates and specifications provided by the government of the state he/she belongs to.

There are separate official portals for Professional Tax of each state which has levied it on its people, where everything related to Professional Tax can be done, starting from enrolment to registration to payments and generation of certificates. For instance, the official portal for Professional Tax in West Bengal is wbprofessiontax.gov.in.

Professional Tax is collected by the Department of Commercial Tax. Since Professional Tax is a state tax, it is collected by the Commercial Tax Department of the concerned states and ultimately it is collected and added to the fund of the municipal corporation. Not all Indian states have levied Professional Tax. There are some states which have imposed Professional Tax on its citizens and some haven’t. Also, there are certain laws and regulations set by each concerned State Government related to Professional Tax. There are certain penalties imposed, as decided by the respective state governments, on non-payment or late payment of Professional Tax.

Based on the way in which one earns a regular income, the obligations of Professional Tax alter. The Professional Tax to be paid also varies from one state to another, where some Indian states and union territories do not charge any Professional Tax. Hence, the amount of Professional Tax to be deducted from one’s salary depends mainly on two factors –

1. The Professional Tax slabs imposed by the state you belong to

2. The amount that a particular individual earns and the threshold slab it falls into

The procedure for paying Professional Tax is a state-specific subject and depends on the respective state governments. Also, Professional Tax return needs to be filed at specific intervals, depending on the concerned state’s requirements and laws pertaining to Professional Tax.

However, just like all other types of taxes, the rules and regulations surrounding Professional Tax are flexible and can change from time to time, based on what is decided by the concerned State Governments. Hence, it is advised to check the present rules and confirm them with a tax consultant before proceeding for registration or enrolment or payment of Professional Tax.