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.
What is Professional tax and who levies 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:
| 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:
The professional tax return must be filed by those having professional tax registration. For example in the state of Maharashtra, those entities having a professional tax liability of more than Rs.50, 000 are required to file a monthly professional tax return before the last date of each month. Those entities having a tax liability of less than Rs.50, 000 in the previous year are required to file a tax return annually – on or before the 31st of March.
A revised professional tax return can be filed in Maharashtra if any omission or incorrect statement has been furnished. Return can be revised at any time before a notice for assessment is served or before the expiry of a period of six months from the end of the year for which the return was due.
| 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.
How to File PTRC Returns in Maharashtra
Employers registered under the Professional Tax Registration Certificate (PTRC) are required to file professional tax returns within the prescribed due dates. In Maharashtra, PTRC returns are generally filed online through the Maharashtra Profession Tax portal.
The return filing process typically involves the following steps:
- Log in to the Maharashtra Profession Tax portal using the applicable credentials.
- Select the relevant return period for which the return is being filed.
- Enter employee salary details and the professional tax deducted during the applicable period.
- Verify the tax liability and ensure that the payment details are correctly reflected.
- Submit the PTRC return online through the portal.
- Download and retain the acknowledgement for future reference and compliance purposes.
Employers should ensure that the information reported in the return matches the professional tax deducted and deposited with the department to avoid discrepancies and compliance issues.
Important Points Relating to PTRC Return Filing
While filing PTRC returns, employers should ensure that professional tax deductions, employee records, payment challans, and return details are maintained accurately. Proper documentation can help businesses respond efficiently to departmental notices and assessments, if any.
Businesses should also verify the PTRC return periodicity assigned to their registration and ensure that returns are filed within the prescribed timelines. In certain situations, revised returns may be filed where omissions or incorrect statements are identified, subject to the applicable provisions and conditions.
Timely filing and proper record maintenance play an important role in avoiding interest, penalties, and other compliance-related issues.
Professional Tax Fines & Penalties
While the actual amount of penalty or penal interest may depend on respective State’s legislation, the penalty is being levied by all such states for not registering once professional tax legislation becomes applicable. Further, there are penalties for not making the payment within due date and also failing to file the return within specified due date.
Professional Tax Return Filing Checklist
Professional tax compliance involves more than just filing returns. Before submitting a return, employers should review the following checklist:
- Verify employee salary and wage records
- Confirm professional tax deductions for the relevant period
- Reconcile tax payments with departmental challans
- Check the applicable PTRC return periodicity
- Review return details before submission
- File returns within the prescribed PTRC return due dates
- Retain acknowledgements and supporting records for future reference
Following a structured compliance process can help businesses reduce filing errors and maintain proper professional tax compliance.
For Example Maharashtra Professional Tax Fines and Penalties
Non-compliance under Professional Tax regulations in Maharashtra could attract heavy penalties or fines.
The penalty for Not Obtaining Professional Tax Registration
A penalty of Rs.5 per day of not obtaining professional tax registration (PTRC) in case of an employer and Rs.2 per day in case of a person (PTEC) is applicable.
The penalty for Late Filing of Return
The Late filing of professional tax return attracts a penalty of Rs.1000 due before the filing of the return. The penalty amount is payable in addition to any amount payable as per the return.
The penalty for Late Payment
The Late payment of professional tax dues can be penalized with a penalty of 10% of the tax due. Further, interest on late payment can be charged at up to 1.25% per month.
Need Assistance with Professional Tax Return Filing?
Managing professional tax compliance can be challenging, particularly for businesses with multiple employees and recurring filing obligations. Shah & Doshi assists businesses with Professional Tax Return filing, PTRC compliance, due date management, and professional tax advisory services.
Whether you require assistance with ongoing professional tax return filing, compliance reviews, or professional tax-related queries, our team can help ensure that your obligations are managed accurately and within the prescribed timelines.
Frequently Asked Questions (FAQs) On Professional Tax Returns
Employers holding a Professional Tax Registration Certificate (PTRC) are generally required to file professional tax returns in accordance with the applicable provisions and filing periodicity assigned by the concerned authority.
PTRC return periodicity refers to the frequency at which an employer is required to file professional tax returns. Depending on the applicable provisions, returns may be required to be filed monthly or annually.
You can check the filing frequency applicable to you through your PTRC registration details or on the Maharashtra Profession Tax portal.
The due date for PTRC return filing varies per the filing frequency assigned to the employer. Employers should ensure that returns are filed in a timely manner to avoid interest and penalties.
Yes. In certain cases, a revised return may be filed where an omission or incorrect statement has been identified, subject to the applicable provisions and timelines.
Where applicable, employers may still be required to file returns even if there is no professional tax liability for a particular period.
Delayed filing may result in interest, penalties, and other compliance-related consequences under the applicable professional tax provisions.