Profession tax enrollment and registration - Applicability in Maharashtra State

By: Mr. Prasanna Ravikant Bhat - 19th March, 2021

Share on:


Apart from the income tax and return filing there is another tax which needs to be paid and filed within the prescribed time limit - Profession Tax.

They are of two compliance requirements:-

A) Profession Tax Enrolment Certificate [PTEC] –
  • PTEC has to be paid by business entities (individuals, LLPs, Private Ltd companies, Public Ltd companies). Individuals carrying on business as sole proprietors, partners in partnership firms, consultant and professionals, directors of companies are also required to enrol for PT.
  • PTEC needs to be obtained within 30 days from date of commencement of profession/trade and business activity.
  • Every enrolled person shall pay tax within one month from the date of enrolment in the first year and thereafter on or before 30th June of every financial year.
  • Enrolled persons can avail the benefit of lumpsum payment scheme, as provided under Profession Tax Act. Accordingly one can discharge his liability for five years by making advance payment, of an amount equal to four times of annual tax liability, on or before 30th June of the year i.e Rs. 10,000/- (Rs.2,500*4 years) instead of Rs.12,500/- (Rs.2500*5 years). If the amount is not paid by 30th June it can still be paid before 31st March, by paying an additional lump sum amount calculated @ Rs.200 p.m. (w.e.f. 1-4-2000) for the period of delay. Any increase or decrease in the rate of tax within the aforesaid period of five years shall not vary the tax liability of such person.
  • No separate return is required to be filed for PTEC. The challan itself is treated as a return.
  • All entities who enrol for PT have to pay Rs.2,500 each year as profession tax irrespective of the income earned during the year.
B) Professional Tax Registration Certificate [PTRC] -
  • All employers have to obtain a Professional Tax Registration Certificate. Having obtained the PTRC, the employers are obligated to deduct PT from their employees' salaries each month and deposit with the state government. The tax so collected is to be deposited each month or once in a year depending on the number of employees.
  • An employer is required to deduct PT from his employees’ salaries only if the salary for an employee exceeds Rs 7,500.
  • PTRC needs to be obtained within 30 days from date of commencement of profession/trade and business activity or within 30 days of becoming liable to pay tax as per the Act.
  • Every year a return has to be filed giving details of the amounts deducted from employees each month and deposited. Non-filing of returns can lead to penal action. Due Dates are
    1. If tax liability during the year or part thereof is less than Rs. 50,000 - Annual return must be filed on or before 31st March of that financial year.
    2. If tax liability during the year is more than Rs. 50,000 than monthly returns on or before the last day of the month following the month for which salary is paid.
  • As per the Profession Tax Act the year commences on 1st March and ends on 28th/29th February.
  • Rates of tax:
    1. In case of male employees if salary exceeds Rs.7,500 p.m but doesn't exceed Rs.10,000 than Rs.175 p.m is deductible.
    2. In case of female employees no deduction required if salary does not exceed Rs.10,000 p.m.
    3. In case of male and female employees if salary exceeds Rs 10,000 than amount to be deducted is as under:
      1. Rs.200 p.m. excep for the month of February
      2. Rs.300 for the month of February
  • Interest on delayed payment of both PTRC and PTEC payments is 1.25% p.m. for first month of delay, 1.50% p.m. for next two months of delay and 2% p.m. thereafter
  • The following individuals are exempted to pay Professional Tax:
    • Parents of children with permanent disability or mental disability.
    • Parents or guardians of individuals suffering from mental disability.
    • Badli workers in the textile industry.
    • An individual suffering from a permanent physical disability (including blindness).
    • Women exclusively engaged as agent under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
    • Individuals, above 65 years of age
    • 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.
  • If a person is both, employed as well as carrying on a business, he is not required to pay the tax twice. He has to obtain the PTEC and pay Rs.2,500. He can share his PTEC with his employer in which case the employer should not deduct any PT from his salary.
  • The Profession Tax Act is a state Act and the law/rules vary from state to state.

Disclaimer: The information contained herein is of general nature. Applicability of the information to specific situations should be determined through consultation with your tax advisor only.


Disclaimer

The Blogs published in this website are for educational purposes only. It is meant to give you a general information and a general understanding of the topics discussed therein and not to provide you or any person any professional advice thereof. By using this website you understand that there is no professional relationship between you and Mundle Venkatraman and Associates (MVA) or with any of its partners, associates or employees. Any information available on this website should not be used as a substitute for competent professional advice.

Terms of Use
Recent Blogs

Audit of Society

By: Priyanka Jain

24th February, 2021

E-WAY Bill

By: Diptika Jadhav

1st February, 2021