Startup-Professional Tax

Overview

Professional tax is a state-level direct tax in India, imposed on individuals earning income through professions, employment, trades, or callings. Employers deduct it from salaried employees' wages and remit it to the state government. Other individuals must pay for it themselves. Tax amounts and calculations vary by state.

What is Professional Tax?

Professional tax is a direct tax imposed and collected by state governments in India. It is levied on individuals earning income from salary or practicing professions like chartered accountants, company secretaries, lawyers, doctors, and others.

Benefits

Minimal Restrictions: Compliance with professional tax has minimal restrictions and an easy process.

Timely Payment: It's a legal requirement, and timely payment is crucial to avoid fines or prosecution.

Simple Registration: Registration and related processes are straightforward.

Supports Welfare & Development: The tax revenue aids in state welfare and development.

Access to Professional Help: Tax professionals can assist with tax-related matters.

Deduction Eligibility: Both employers and employees can claim deductions for previously paid professional tax.

Exemptions from Professional Tax:

Parents of Children with Disabilities: Parents of children with permanent, mental, or other disabilities are exempt.

Armed Forces Members: Those serving in the military under the Army Act of 1950, Air Force Act of 1950, and Navy Act of 1957, including auxiliary forces and reservists, are exempt.

Senior Citizens: Individuals aged 65 and above are exempt.

Physically Disabled: Persons with permanent physical disabilities, including blindness, are exempt.

Women Agents: Women working as agents for the Mahila Pradhan Kshetriya Bachat Yojana or as Directors for small savings schemes in the state are exempt.

Temporary Textile Workers: Temporary workers (Badli workers) in the textile industry are also exempt from Professional Tax.

Tax And Process

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Documents Required

Submit both the online and hard copy of the application form.

For Companies: Certificate of Incorporation (COI), Articles of Association (AOA), and Memorandum of Association (MOA). PAN card of the company (Attested by the Director).

For Proprietorship: Self-attested PAN card.

List of all Directors and their employees along with their identity proof and address proof. Passport-size photos.

Company's Bank Details: Bank account details. Bank statement. Canceled cheque.

Proof of Registered Office: Ownership proof or, in the case of rented property, an NOC from the owner.

Company-Specific: Board Resolution (for companies). Declaration of consent by concerned Partner (for partnerships).Salary and Attendance Records.

Procedure

Online Application: Complete the online application via the CTD portal of your state.

Submit Hard Copy: After online filing, submit a hard copy of the application along with attested documents to the relevant department.

Examination: The tax authority carefully reviews the application, verifying the accuracy of the provided data.

Registration Certificate: If the authority approves the application, they issue the registration certificate. If there are discrepancies, the applicant must address them promptly in response to authority queries.

FAQ's