Many salaried employees might be very well aware of the term ‘professional tax’ as it would have been mentioned in the pay slips/Form 16 issued to them. But all of them may or may not understand what it is and why is it appearing in their pays slips/Form 16 as a deduction from their salary income. Hence, this article is an attempt to provide a better picture of what is ‘Professional tax’ and why is it deducted and is it only salaried class who are bearing it.
The nomenclature ‘Professional tax’ could be one those terms which do not completely convey the real meaning of the term. It is just not the tax levied only on professionals unlike the name suggests. It is a tax on all kinds of professions, trades, and employment and levied based on the income of such profession, trade, and employment. It is levied on employees, the person carrying on business including freelancers, professional etc. subject to income exceeding the monetary threshold if any.
As per Article 246 of the Constitution of India, only Parliament has the exclusive power to make laws with respect to Union List which includes taxes on income. The state has the power to make laws only with respect to Concurrent list and State list. However, Professional tax though is a kind of tax on income is levied by State Government (Not all states in the country chose to levy a professional tax). State Government is also empowered to make laws with respect to professional tax though being a tax on income under Article 276 of the Constitution of India which deals with a tax on professions, trades, callings, and employment.
It may be noted that professional tax is a deductible amount for the purpose of Income-tax Act, 1961 and can be deducted from taxable income.
Professional Tax Rate
Professional tax being levied by the State Government is different in different states. Every state has its own laws and regulation to govern professional tax of that particular state. However, all the states do follow slab system based on the income to levy the professional tax.
Further, Article 276 of the Constitution which empowers State Government to levy professional tax also has provided for a maximum cap of Rs. 2,500 beyond which professional tax cannot be charged on any person.
Following Details are provided for PTRC for the State of Maharashtra
Registrations:
Obtaining a PTRC registration is mandatory within 30 days of employing first staff in the business. A delay in obtaining the PTRC Certificate will be charged at Rs.5 per day from the due date.
Slab for PTRC Payable by the Employer in Maharashtra:
The payment of income taxes can be made to the government manually i.e. cash/cheque in any designated bank branch or through e-payment. Payment should be made in Challan 280 in both the cases. The challan should be filled with the utmost accuracy as it is important for further processing.