Meaning & Applicability Of Professional Tax In India (PTRC)
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.
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. PTRC Full Form is Professional Tax Registration Certificate. It is a registration obtained by employers for deducting professional tax from employee salaries and depositing it with the respective state government. 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.
Professional Tax (PTRC) General Tax Amount and Due Dates
Many business owners often wonder whether PTRC applies to employers or employees. While professional tax is deducted from eligible employees, the responsibility for obtaining PTRC registration, deducting the applicable tax, and depositing it with the government generally rests with the employer.
Accordingly, companies, LLPs, partnership firms, proprietorship concerns employing staff, manufacturing units, service providers, and other organizations with salaried employees may be required to obtain PTRC registration and comply with the applicable professional tax provisions. Understanding PTRC applicability at an early stage can help businesses avoid compliance issues and ensure timely fulfilment of their professional tax obligations.
Difference Between PTRC and PTEC (PTEC vs PTRC)
One of the most common areas of confusion in professional tax compliance is the difference between PTRC and PTEC. Although both registrations are associated with professional tax, they apply to different obligations.
PTRC (Professional Tax Registration Certificate) is generally obtained by employers who deduct professional tax from employee salaries and deposit it with the government.
PTEC (Professional Tax Enrollment Certificate), on the other hand, is obtained by professionals, businesses, and entities that are liable to pay professional tax on their own behalf.
As a result, a business may sometimes require both registrations. For example, a company employing staff may need PTRC for employee-related professional tax deductions while also holding PTEC for its own professional tax liability.
| Particulars | PTRC (Professional Tax Registration Certificate) | PTEC (Professional Tax Enrollment Certificate) |
|---|---|---|
| Who Needs It? | Employers who deduct professional tax from employees’ salaries. | Professionals, businesses, companies, LLPs, and other entities liable to pay professional tax on their own behalf. |
| Purpose | To collect and deposit professional tax deducted from employees. | To pay professional tax applicable to the entity or professional. |
| Tax Liability | Tax is deducted from employees and deposited by the employer. | Tax is paid by the registered entity itself. |
| Applicability | Applicable where an employer is liable to deduct professional tax from employees. | Applicable to individuals and entities carrying on a profession, trade, or business. |
| Return Filing Requirement | Employers may be required to file professional tax returns relating to employee tax deductions. | Generally does not involve employee-related return filing obligations. |
| Who Pays the Tax? | Employer deposits the tax deducted from employees. | The registered entity pays its own professional tax liability. |
| Can Both Be Required? | Yes. A business employing staff may require PTRC for employee-related professional tax compliance. | Yes. The same business may also require PTEC for its own professional tax liability. |
Professional Tax (PTRC) General Tax Amount and Due Dates:
Professional tax (PTRC) is required to be deducted from the salary or wages paid. Since it is imposed at the state level, different states have different rates, collection method and hence, the tax amount varies but it is capped at Rs.2500 per annum. The rate is thus, charged on the Income Slabs set by the concerned State Governments.
The following information provides an overview of PTRC registration, applicability, payment, return filing, and compliance requirements in 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:
| SALARIES OR WAGES PAID TO EMPLOYEES (MONTHLY) | AMOUNT |
|---|---|
| Does not exceed ₹7,500 | NIL |
| Male - Exceeds ₹7,500 but does not exceed ₹10,000 | ₹175 per month |
| Male - Exceeds ₹10,000 | ₹200 per month* |
| Female - Does not exceed ₹25,000 | NIL |
| Female - Exceeds ₹25,000 | ₹200 per month* |
*Rs.300 in the month of February.
PTRC Payment and Filing of Returns:
Annual Tax Liability During the Previous Year Periodicity Due Date for Payment & E-Return Filing Annual Tax Liability less than ₹50,000 Annually* On or before 31st March of the respective financial year Annual Tax Liability equal to or above ₹50,000 Monthly Last day of the respective month
*Periodicity is monthly in the first year of registration.
Interest Rates:
An interest of 1.25% per month is levied on delayed payment of Professional Tax. Employers should ensure timely payment and filing of returns to avoid interest and penalties under the applicable provisions of the Maharashtra State Tax on Professions, Trades, Callings and Employments Act.
FAQ
PTRC stands for Professional Tax Registration Certificate and is generally obtained by employers who are responsible for deducting professional tax from employee salaries and depositing it with the government.
The full form of PTRC is Professional Tax Registration Certificate.
PTRC registration is generally required for employers who deduct professional tax from employees and are responsible for depositing it with the respective authorities.
The responsibility of obtaining PTRC registration and depositing professional tax generally rests with the employer.
PTRC relates to professional tax deducted from employees, whereas PTEC applies to professional tax payable by businesses, professionals, or entities on their own behalf.
PTRC return filing refers to the reporting of professional tax deducted and deposited by registered employers during a specified period.
PTRC payment refers to the deposit of professional tax collected from employees with the concerned authorities.
PTRC payment and return filing due dates may vary depending on the applicable regulations and filing frequency prescribed by the authorities.