Introduction
In India, businesses and professionals must comply with multiple taxation laws to avoid penalties and ensure smooth operations. One such lesser-known but important compliance is Professional Tax. Unlike income tax, which is levied by the Central Government, professional tax is a state-level tax imposed on income earned by way of employment, trade, profession, or calling.
Professional Tax Registration is a mandatory requirement for employers and self-employed individuals in certain states of India. It is governed by the respective State Professional Tax Acts and rules, with Article 276 of the Constitution of India empowering states to levy such a tax. Though the maximum amount chargeable is capped at ₹2,500 per year per person, compliance with this tax is essential to avoid penalties, interest, and loss of credibility.
This article provides a comprehensive guide on professional tax registration in India, including its applicability, process, exemptions, compliance requirements, and penalties. It also explains how RegistrationMART can simplify this process for employers, professionals, and businesses.
1. Legal Framework of Professional Tax
Professional Tax is not a central levy; it is governed by the State Governments under their respective laws.
- Constitutional Basis: Article 276 of the Constitution of India authorizes states to levy a tax on professions, trades, callings, and employments. However, the total amount of professional tax payable by any person to the state cannot exceed ₹2,500 per annum.
- Enforcement Authority: State Governments through their Commercial Tax Departments, Municipal Corporations, or Local Bodies.
- Applicability: Every person earning an income from salary, wages, or practicing a profession such as doctors, lawyers, chartered accountants, company secretaries, engineers, architects, consultants, freelancers, etc.
Examples of State Acts:
- Maharashtra – Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975.
- Karnataka – Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976.
- Gujarat – Gujarat Panchayats, Municipalities, Municipal Corporations and State Tax on Professions Act, 1976.
- West Bengal – West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979.
Businesses operating in multiple states must register separately in each state where professional tax applies.
2. Applicability of Professional Tax
A. For Employers
- Every employer who pays salary/wages to employees must deduct professional tax at prescribed state rates and deposit it with the government.
- Employers must obtain Professional Tax Registration Certificate (PTRC) for deduction and payment of professional tax on behalf of employees.
B. For Self-Employed Professionals
- Doctors, lawyers, CAs, CSs, architects, consultants, contractors, and freelancers must obtain a Professional Tax Enrollment Certificate (PTEC) and pay tax directly to the government.
C. Categories of Persons Liable
- Salaried employees (private and government).
- Employers (companies, LLPs, partnership firms, proprietorships).
- Self-employed professionals (CAs, CSs, doctors, lawyers, architects, engineers).
- Freelancers and consultants.
- Traders and shop owners.
3. Exemptions from Professional Tax
Common exemptions include:
- Senior citizens (aged 65 years and above).
- Disabled individuals with more than 40% disability.
- Parents/guardians of persons with permanent disability or mental retardation.
- Members of the Armed Forces.
- Badli workers in textile industries.
- Persons with a single child and suffering from permanent disability (in some states like Maharashtra).
4. Professional Tax Rates in India (State-Wise Examples)
Maharashtra
- Salary/Wages up to ₹7,500 (men) – Nil
- Salary/Wages up to ₹10,000 (women) – Nil
- ₹7,501–₹10,000 – ₹175/month
- Above ₹10,000 – ₹200/month (₹300 for February)
Karnataka
- Up to ₹15,000 – Nil
- Above ₹15,000 – ₹200/month
Gujarat
- Up to ₹5,999 – Nil
- ₹6,000–₹8,999 – ₹80/month
- ₹9,000–₹11,999 – ₹150/month
- Above ₹12,000 – ₹200/month
West Bengal
- Up to ₹8,500 – Nil
- ₹8,501–₹10,000 – ₹90/month
- ₹10,001–₹15,000 – ₹110/month
- ₹15,001–₹25,000 – ₹130/month
- ₹25,001–₹40,000 – ₹150/month
- Above ₹40,000 – ₹200/month
👉 Employers must deduct as per the slab applicable in their state of operation.
5. Process of Professional Tax Registration
- Determine Applicability: Check if the state where your business operates has professional tax laws and whether PTRC/PTEC applies.
- Online Application: Visit the respective State Commercial Tax Department portal and create login credentials.
- Submit Application: Fill in business, PAN, address, employer details, employee strength, salary details, and upload documents.
- Document Verification: Authorities verify documents (sometimes physical verification).
- Grant of Registration: Certificate issued within 7–15 working days.
6. Documents Required
- PAN card of business/individual
- Certificate of incorporation / partnership deed / LLP agreement
- Shop & Establishment certificate or GST certificate
- Business address proof (electricity bill, rent agreement)
- ID & address proof of proprietor/partners/directors
- Salary details of employees (for PTRC)
- Bank account details
7. Compliance & Returns
- Employers: Deduct and deposit monthly.
- Self-employed: Pay annually.
- Returns: Quarterly/half-yearly/annual depending on state.
Example: Maharashtra – Monthly payment & annual return; Gujarat – Monthly/quarterly payment & return.
8. Penalties for Non-Compliance
- Late Registration – ₹5/day
- Late Payment – 1.25% to 2% interest per month
- Non-payment – Penalty up to 50% of tax due
- Extreme cases – Prosecution
9. Benefits of Professional Tax Compliance
- Legal requirement – avoid penalties
- Employee trust – timely deductions & deposits
- Business credibility – essential for loans, tenders, audits
- CSR & reputation – shows compliance commitment
10. Role of RegistrationMART in Professional Tax Registration
- Assessing applicability based on business model
- Handling end-to-end documentation
- Online application & liaison with authorities
- Timely payments & returns filing
- Compliance reminders to avoid penalties
Conclusion
Professional Tax Registration in India may appear small compared to GST or Income Tax, but it plays a crucial role in governance. Employers must deduct and deposit tax for employees, while self-employed professionals must pay their own liability. Since rules vary state to state, expert help is essential.
RegistrationMART helps businesses, professionals, and NGOs with Professional Tax Registration and compliance, ensuring you stay legally compliant and build a strong reputation.
