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Professional tax is a direct tax levied on persons earning an income by either practicing a profession, employment, calling, or trade. Unlike income tax imposed by the Central Government, professional tax is levied by the government of a state or union territory in India. In the case of salaried and wage earners, the professional tax is liable to be deducted by the Employer from the salary/wages, and the same is to be deposited to the state government. In the case of other classes of individuals, this tax is liable to be paid by the employee himself. The tax calculation and amount collected may vary from one State to another, but it has a maximum limit of Rs. 2500/- per year.

Professional Tax Registration and Compliance

Professional Tax Registration is mandatory within 30 days of employing staff in a business or, in the case of professionals, 30 days from the start of the practice.

Application for the Registration Certificate should be made to the assessed state tax department within 30 days of employing staff for his business.

If the assessee has more than one place of work, then the application should be made separately to each authority with respect to the place of work under the jurisdiction of that authority.

Exemptions for Payment of Professional Tax:

  • Parents of children with permanent disability or mental disability.
  • Members of the forces as defined in the Army Act, 1950, the Air Force Act, 1950, and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the State.
  • Badli workers in the textile industry.
  • An individual suffering from a permanent physical disability (including blindness).
  • Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
  • Parents or guardians of individuals suffering from a mental disability.
  • Individuals, above 65 years of age.

Benefits of Professional Tax

Avoid having your account levied

Stop tax wage garnishment

Settle all your outstanding tax debt

Make sure you don’t get caught up on past returns

Assist with audits

Avoid loss of credit score due to unpaid dues

Enjoy more peace of mind

Protection of Assets and Income

Helps you interpret Tax Laws

Explains to you all the IT processes

Trust and Goodwill

Profession Tax Registration promote and build a feeling of trust and quality in the customers mind and it establish credibility.

FAQ on Profession Tax Registration

  • Who Pays Profession Tax?
    In the case of Salaried and Wage-earners, the Professional Tax is liable to be deducted by the Employer from the Salary/Wages, and the Employer is liable to deposit the same with the state government.

    Self-employed persons who carry out their profession or trade on their own and fall in the ambit of profession tax are liable to pay the tax themselves to the state government.

  • Who comes under professional tax?
    Professional tax is a tax on all kinds of professions, trades, and employment and is levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on the business including freelancers, professionals, etc., subject to income exceeding the monetary threshold if any.
  • What is meant by profession tax?
    Professional tax is a direct tax that is deducted from your gross salary by your employer. This tax is levied by the state government and thus can vary depending on the state you live in. The maximum limit of which you can be charged is Rs 2500. The tax is calculated based on the slabs.
  • Is professional tax refundable in ITR?
    Professional tax is paid at the end of month presuming that you have carried out the profession in that month. Therefore once professional tax is paid, there can be no refund. you can claim deduction of profession tax file filing your income returns.