As a business owner, you need to deal with many state and central regulations regarding business licenses and taxes. One such state obligation is that of making professional tax payments. This is a state tax, and the amount payable rules differ slightly in every state. Here is all the information you need to ensure your business collects and pays the correct professional tax each month.
As a business owner, you need two certificates:
- Professional tax registration certificate (PTRC)
- Professional tax enrolment certificate (PTEC)
Every state has its own rules governing professional tax. However, you need to first register on the Maharashtra government website and seek a ‘registration certificate’ in Maharashtra. On registration and verification of your registration request by officials, you will receive an ‘enrolment certificate’.
Once you receive the professional tax enrolment certificate, you can deduct professional tax for your employees and make payments.
2. Calculation of professional tax payable
Calculation of professional tax is based on the gross salary for that month. Let’s consider the example of an employee whose CTC per month is Rs. 50,000. The gross salary is calculated by deducting EPF, gratuity, leave deduction and loan repayments from the CTC to the company. The balance will give you the gross salary. Let’s consider for this example that after deductions, the gross salary comes to Rs. 40,000. As a business owner, you will need to deduct professional tax on Rs. 40,000. As per the professional tax rules in Maharashtra, as a business owner, you need to deduct Rs. 200 towards professional tax, except in March, when the deduction will be Rs. 300.
3. Rules for deduction of professional tax from employees
While professional tax is calculated on pre-determined slabs, all paid employees working in the business are liable to pay professional tax. As the business owner, it is your responsibility to deduct professional tax and make payment of the said amount to the government. The rules and slabs differ between states as the professional tax payments are based on the respective state’s income levels and minimum wage parameters.
4. Professional tax registration in different states
States offer you the convenience of registering for professional tax both online as well as offline. Visit the state government tax website and select the respective link from there. Alternatively, you can also visit the nearest district sales tax office to complete the registration formalities. You will need to submit some business-related documents, so it is prudent to understand the documents required before visiting the government office.
5. How to make professional tax payments
Professional tax payments can either be made online or by visiting the local state tax office. Each state collects professional tax through net banking. Ensure you have the necessary banking facilities set up, and then visit the government tax department website to complete the payment.
The state collects professional tax to provide you with the infrastructure to run your business. It was introduced in 1949 and was last revised in 1988. The maximum tax that a state can collect annually as professional tax from each employee is Rs. 2,500. To ensure your business keeps running smoothly, ensure that you abide by the rules and pay professional tax on behalf of your employees as required under state law.
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