Meaning & Applicability Of Professional Tax In India (PTEC)
Professional Tax was introduced in the year 1949 via powers given to the States by the way of Clause (2) of Article 276 of The Constitution of India. It is levied on all the Income earned by the way of profession, trade, calling and employment. Professional Tax happens to be a source of revenue for the State Government and its collection helps them in implementing welfare schemes for the overall growth and development of the respective state.
Professional Tax – PTEC and PTRC:
The PTEC and PTRC are different certificates that are usually required by a business entity operating in India. PTEC stands for Professional Tax Enrollment Certificate and PTRC is Professional Tax Registration Certificate. PTEC permits to pay the professional tax of the business entity (Private Ltd, Public Ltd, OPC, etc) and also of the owner or professional (sole proprietor, partner, director, etc). Whereas, the function of a PTRC is to permit the employer (government or non-government) to deduct professional tax from the employee’s salary or wages and deposit the same to the respective state government. A fully functional business entity commonly requires both to conduct its business operations.
Registrations:
Obtaining a PTEC registration is mandatory within 30 days from the date of incorporation or start of the business or practice, i.e; you have to apply for PTEC within 30 days of obtaining S & E license, Certificate of Incorporation, Service Tax RC, Sales Tax RC, etc.
Deduction Available in Income Tax:
The PTEC tax amount paid during the year is also allowed as a ‘Deduction’ under the Income Tax Act.
Important Class of Persons and PTEC Payable:
Following details are provided for PTEC for the state of Maharashtra for FY 2017-18:
(a) Legal Practitioners including Solicitor and Notaries;
(b) Medical Practitioner including Medical Consultants and Dentists;
(c) Technical and Professional Consultants, including Architects, Engineers, R.C.C. Consultants, Tax Consultants, Chartered Accountants, Actuaries and Management Consultants;
(d) Chief Agents, Principal Agents, Insurance Agents and Surveyors and Loss Assessors registered or licensed under the Insurance Act 1938, I.T.I. Agents under U.T.I. Scheme, N.S.S. Agents under Postal Scheme;
(e) Commission Agents, Dalals and Brokers (other than estate brokers covered by any other entry elsewhere in this Schedule)
(f) All types of Contractors (other than building contractors covered by any other entry elsewhere in this Schedule); and
(g) Diamond dressers and diamond polishers, having not less than one year's standing in the profession.Rs.2500 per annum
Directors (other than those nominated by Government) of Companies Registered under the Companies Act 1956 (1 of 1956) and Banking companies as defined in the Banking Regulation Act, 1949 (10 of 1949)
Explanation: The term 'Directors' for the purpose of this entry will not include the person who are Directors of the Companies whose registered offices are situated outside the State of Maharashtra and who are not residing in the State of Maharashtra.Rs.2500 per annum
Dealers registered under the Maharashtra Value Added Tax Act, 2002 (Mah. IX of 2005) or Dealers registered only under the Central Sales Tax Act, 1956 (74 of 1956), whose annual turnover of sales or purchases-
i.is rupees 25 lakh or less
exceeds rupees 25 lakhRs.2000 pa
Rs.2500 pa
Companies registered under the Companies Act, 2013 and engaged in any profession, trade or calling. Rs.2500 per annum
Each Partner of a firm (whether registered or not under the Indian Partnership Act, 1932) engaged in any profession, trade or calling. Rs.2500 per annum
Each Co-parcener (not being a minor) of a Hindu Undivided Family, which is engaged in any profession, trade or calling. Rs.2500 per annum
Persons, other than those mentioned in any of the preceding entries who are engaged in any profession, trade calling or employment and in respect of whom a notification is issued under the second proviso to sub-section (2) of section 3. Rs.2500 per annum
A full list of class of persons and corresponding PTEC payable can be obtained by clicking HERE
Due Date for Payment Of PTEC:
- In respect of Persons enrolled on or before the 31st May: Tax is to be paid before 30th June.
- In respect of Persons enrolled after 31st May: Tax is to be paid within one month of the date of enrollment.
Interest Rate:
An interest of 1.25% pm shall be levied on delayed payments of Professional Tax.
Penalties:
A penalty of 10% shall be levied on the amount owed in case of delayed payment. Delay in obtaining the PTEC Certificate will be charged at Rs.2 per day.
Exemptions:
Following classes of persons are exempt from payment of professional tax:
- Persons having completed the age of 65 years (w.e.f. 1-4-1995);
- Partnership firms and HUFs (but each partner of a partnership firm and each coparcener of HUF are liable for enrollment, see Entries 19 & 20 in Schedule 1).
Lump Sum Payment Scheme for PTEC Holder Persons:
There is a lump sum payment scheme for enrolled persons. The individual who pays Rs. 2,500 annually has an option to pay Rs. 10,000/- for five years.
This Post Has 12 Comments
1. I was working as Independent Consultant for 6 months in FY 17-18 (Apr-Sep) and then as a Salaried Employee for remaining 6 months (Oct onwards). For my Salaried job, My employer is deducting PT @Rs200pm. SO do I need to pay PT as Consultant for 6m only (Apr-Sep) or for whole Year?
2. I was not aware of reqt for registration under PTEC. I was Regd for Service Tax in Jan17 which I converted to GST in Jul’17. So Please let me know how much penalty I have to pay assuming start date of Consultancy as 1 Jan 2017.
3. I am not surrendering my GSTN as I am a Salaried employee
Thanks
whether PTEC or PTRC applicable for Casual or temporary registered person under GST.
my query is
we are conducting Dental Exhibition in maharashtra & dealer from various state are participating in that . they are taking temporary GST no. for 3 or 5 days.
so whether PTRC /PTEC aplicable??
what if a firm is registered as partnership firm and operates in more than one states.
do all the partners have to register PTEC in all states and pay PTEC in all states?
In Maharashtra – Yes. All partners needs to register for PTEC.
In other states – based on respective State Law
Dear Sir/Madam,
if a person is director in two companies in Maharashtra, should he get PTEC for both the companies and make the PTEC payment for both the companies respectively of RS 2500 each.
No He will pay for only one Co. Maximum Rs 2500 PT is required to be paid as per Maharashtra PTEC Act
I want to a full list of class of persons and corresponding PTEC payable . could you do this.
For professional tax enquiry, finding the best CA is hard thing now. I see your profile in Sulekha.
All the best for your future projects.
https://www.sulekha.com/shah-doshi-mulund-west-mumbai-contact-address
Penalty for FY 17-18 & FY 18-19, PTEC & PTRC, return & payment. (Monthly and annually)
My turn over or purchasing is less than 5 lakh rupees so what amount of tax I have to pay?
Dear Sir,
We are registered company in Delhi and office in Delhi. but before 4 year back we taken a office in Mumbai and obtained PTRC certificate in mumbai and paying monthly tax of employees related to mumbai office.
we didn’t take PTEC registration in mumbai till now. Please confirm we have to take the PTEC certificate in mumbai.
IS PTEC APPLICABLE FOR NRIS