Professional Tax at a glance

Professional tax is a State tax which is levied by the State on account of the infrastructure it provided to the people so that one can carry out profession in that State. This form of tax was first levied in India in 1949 vide Article 276 of the Constitution of India which provides that “there shall be levied and collected a tax on professions, trades, callings and employments, in accordance with the provisions of this Act. Professional tax is collected by the Commercial Tax Department of the respective states. It covers two types of persons

• Registered person: – Employer (Company, Firm, LLP etc.) who employees people and pays tax on the behalf of his employees is called registered person as he has to get himself registered. Registered persons generally pay tax on monthly basis but in some states it’s annually, half yearly or quarterly.

• Enrolled person:- Person who works independently say Freelancer, Businessman, Medical Practitioner, Contractor, Estate Agent etc. and pays his tax himself is called enrolled person as he has to enroll himself. Enrolled persons usually pay tax on annual basis by paying a lump sum amount but in some states tax period are different.

Important point- Employer also being a person carrying on trade/profession may require to obtain both registration certificate and enrolment certificate. Let’s understand this with an example, Mr. A is running a business with the help of his employees, in this case he will register himself to pay tax on his employees’ behalf at the same since he is carrying business/profession, he will enroll to pay tax for himself.

Types of compliances covered by professional tax act and rules made thereunder:-

• Registration/enrolment
• Payment of tax
• Filing of return
• Exhibition of certificate of registration or enrolment certificate at the place of work

Since said tax is levied by States, at present only 19 states have their own laws and regulations to govern professional tax, let’s figure it out.

States in which professional tax is applicable:-

• Andhra Pradesh:- (A.P. Tax on Professions, Trades, Callings and Employments Act, 1987)
• Assam:- (Assam Professions, Trades, Callings And Employments Taxation Act, 1947)

• Bihar:- (Bihar Tax on Professions, Trades, Callings and Employments Act, 2011)
• Chhattisgarh* (Inactive)
• Gujarat:- (Gujarat Panchayats, Municipalities Municipal Corporations and State Tax on Professions, Trades, Callings and Employments Act, 1976)
• Jharkhand:- (Jharkhand Tax on Professions, Trades, Callings and Employments Act 2011)
• Karnataka:- (Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976)
• Kerala**
• Madhya Pradesh:- (Madhya Pradesh Vritti Kar Adhiniyam, 1995)
• Maharashtra:- (Maharashtra State Tax on Professions, trades, callings and employments Act, 1975)
• Manipur:- (Manipur Professions, Trades, Callings And Employments Taxation Act, 1981)
• Meghalaya:- (Meghalaya Professions, Trades, Callings and Employments Taxation Act, 1947)
• Mizoram:- (Mizoram Professions, Trades, Callings and Employments Taxation Act, 1995)
• Odisha:- (Orissa State Tax On Professions, Trades, Callings And Employments Act, 2000)
• Puducherry***
• Tamil Nadu****
• Tripura:- (Tripura state tax on Professions, Trades, Callings and Employments Act, 1997)
• West Bengal:- (West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979)
• Punjab***** :- (Punjab State Development Tax Act, 2018)

* There is a professional tax act (Chhattisgarh Profession Tax Act 1995) in Chhattisgarh but every person is exempted from this act w.e.f. 1st April, 2011 vide Notification No. F-10/22/2011/CT/V(22) dated 31/03/2011. In other words, Profession tax is not in force in Chhattisgarh at present.

**In Kerala professional tax is levied on rural and urban basis. In rural area it is levied under Kerala Panchayat Raj Act 1994 and in urban area it is levied under Kerala Municipality Act, 1994

***In Puducherry professional tax is levied on rural and urban basis. In rural area it is levied under Puducherry Village And Commune Panchayats Act, 1973 and in urban area it is levied under Puducherry Municipalities Act, 1973.

****In Tamil Nadu professional tax is levied on rural and urban basis. In rural area it is levied under Tamil Nadu Panchayats Act, 1994 and in urban area it is levied under Tamil Nadu Municipal Laws (Second Amendment) Act, 1998.

*****Professional tax in Punjab is levied under Punjab State Development Tax Act, 2018 w.e.f. 29^th April, 2018.

States in which professional tax is not applicable:-

Disclaimer : This is an effort by Lexcomply.com to contribute towards improving compliance management regime. User is advised not to construe this service as legal opinion and is advisable to take a view of subject experts.