Professional Tax Registration

Professional Tax is levied by the state government that applies to all salaried employees working in government or non-government entities or in practice of any profession.

The professional tax registration is mandatory within 30 days of employing staff in the business or; for professionals, 30 days from the start of their practice. Professional tax is required to be deducted from the salary or wages paid; since it is imposed at the state level, different states have different rates and 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 tax amount paid during the year is also allowed as a ‘Deduction’ under the Income Tax Act.

Professional tax happens to be a source of revenue for the Government (state) that helps them in implementing welfare schemes for the overall growth and development of the respective region.

The PTRC and PTEC are different certificates that are usually required by a business entity operating in India. PTRC is Professional Tax Registration Certificate and PTEC stands for Professional Tax Enrollment Certificate. A business entity commonly requires both to conduct its business operations.
The procedure for registration of the PTRC and PTEC is usually the same, but the process differs as per state legislative.

The function of a PTRC is to permit the employer to deduct professional tax from the employee’s salary or wages and deposit the same to the respective state government. On the other hand, the PTEC permits to pay the professional tax of the company and also of their directors. Thus, a regular company requires both, PTRC and PTEC, and according to the law it has to pay its own professional tax and also for all its employees.

In cases where a company does not have any payable employees, then they will only require a PTEC, and not a PTRC. This is especially the case for professional practitioners such as Doctors, Advocates, CAs etc. These professionals usually have their own registered practices, but do not have employees that meet the criteria for professional tax.

1. Identity, address proofs and PAN cards of the directors or partners and details of the employees are required to be submitted.
2. The Professional Tax application should be filed for all employees and submitted to the respective authorities.
3. The hard copy is issued within 10 days in all the major cities, but it would take around 15 to 20 days elsewhere.

The frequency of filing returns depends on the state an employer or a professional is located in; it is mandatory in the case of PTRC but not PTEC.

For example, in West Bengal, returns need to be filed only once annually; but in Maharashtra, returns can be filed monthly if the liability exceeds Rs. 20,000, quarterly if it is less than Rs. 20,000 and annually if it is under Rs. 5000.