Our Indian Constitution has given the right to charge professional tax to the state governments. It is up to the state government to collect it or not. Accordingly, some states in India collect Professional Tax while some states don't. Article 276(2) of Indian Constitution provides provisions for charging Professional Tax
The topics covered in this article are
What is Professional tax?
Professional tax charged by Karnataka government
Who is required to pay professional tax?
Professional Tax Certificates
How to pay professional tax in Karnataka?
Deduction from total income tax payable
Exemption from professional tax
Penalty for late payment of Professional Tax
1. What is Professional Tax?
It is a compensation collected by the state government to avail the resources of the particular state. These tax amount collected shall be utilised towards the betterment or infrastructure of a state
2. Professional tax charged by Karnataka government
Karnataka government levies professional tax on all the people earning income above threshold limit of Rs. 15,000 in Karnataka
Professional tax is levied on both salaried and self-employed people
Professional Tax slab of Karnataka is
All the provisions of Professional tax are under the preview of The Karnataka Tax on Professions, Trades, Callings and Employment Act 1976
3. Who is required to pay professional tax in Karnataka
● Professional tax is not only restricted to professionals
● Instead every person earning income above the threshold limit is required to pay professional tax
● Employers deduct professional tax of salaried employees
● In case of non-salaried employees or self-employed such as Doctors, Chartered Accountants need to deposit the tax amount to local authorities appointed by the Karnataka state government
● Hindu Undivided Family, Companies, firms, Corporations are also required to pay professional tax
● These provisions are applicable to all state's Professional Tax rules
4. Professional tax certificates
● Professional Tax Registration Certificate (PTRC) and Professional Tax Enrolment Certificate (PTEC) is to be obtained by the employer or company deducting professional tax
● Certificate of Enrolment has to be obtained within 30 days of being eligible to deduct professional tax
● If an employer who has obtained Certificate of Enrolment fails to deduct tax then penalty will be charged
5. How to pay professional tax in Karnataka?
Professional tax can be paid online on the official website of Karnataka State government. The official website to pay professional tax is e-prerana
1. Go to the website e- prerana and enrol as new user
2. Fill all the details such as PT office, form and class of business
3. In the next step fill all the personal details and register
4. After registration, by filling GSTIN, tax details and bank details payment can be made
6. Deduction from total Income tax payable
Under the section 16(iii) of Income Tax Act, the professional tax charged is allowed as a deduction from total income tax payable.
7. Exemption from Professional Tax
Some categories of people are exempt from preview of Professional Tax.
● Senior citizens
● Parents or individuals suffering from physical disability
● Parent of mentally challenged child
These are some exemptions from Professional Tax
8. Penalty for late payment of Professional tax in Karnataka
For late payment of professional tax in Karnataka, a penalty of 1.25% per month is charged. Maximum limit of penalty is 50% of the outstanding tax to be paid.
Frequently asked questions
1.Which states in India levy Professional Tax?
Sikkim, Madhya Pradesh, Karnataka, Gujarat, Tripura, Assam, Kerala, Meghalaya,Maharashtra, Telangana, Andhra Pradesh, Bihar, West Bengal, Tamil Nadu
2. How is professional tax payment made in Karnataka?
Professional tax payment can be made online in the official website for e payment
3. Which Act governs Professional Tax in Karnataka?
Karnataka Tax on Professions, Trades, Callings and Employment Act 1976 levies professional tax in Karnataka
4.Is there deduction for Professional Tax?
Professional Tax is exempt while calculating Income Tax
5.What is the maximum amount of Professional Tax payable in any state in India?
Maximum amount of Professional Tax chargeable is Rs. 2,500 per annum