Professional tax is a type of direct tax levied and collected by the State government on any person engaged in any kind of profession. In India, rates and method of collecting professional tax varies from state to state. Also, some states in India do not impose this tax. Professional Tax in Karnataka is levied under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976.
Who must Pay Professional Tax?
According to the provisions of this act, every single person who is carrying on any profession, calling, and trade whether public or private, or is employed in any other way in a particular State, is liable to pay tax on profession to the State Government at the specific rates. and includes a HUF, firm, company, LLP, corporation or other corporate body, society, club or association etc. Every employee with Salary/Wage of INR 15000 or more and every employer shall pay this tax. If the salary of employees is less than INR 15000, no amount is to be deducted as Profession tax and if salary of any employee is more than INR 15000, INR 200 per month is to be deducted from the salary of respected person. Professional tax is mandatory to be paid.
Who is responsible for deduction?
Tax payable under this Act by the employee shall be deducted by his employer from the salary or wage payable to the employee before making the payment of salary and such employer shall be liable to pay tax to the appropriate Government department on behalf of all such employees.
Registrations under Professional Tax Act
An employer in Karnataka is required to be registered within 30 days from the date he becomes liable to pay the professional tax. The application for registration can be filed online and usually a person is registered within 3 to 7 days after submission of the application. Any delay in taking registration under professional tax attracts penalty levied per day by the assessing authority.
According to professional tax regulations in Karnataka, the following two types of registrations must be obtained by the employer:
a) Professional Tax Employer Registration – Certificate of Enrollment (EC):
Any business entity regardless of employing any person or not, shall obtain the Certificate of Enrollment (EC) from the Profession Tax Officer and pay tax at the specified rated to the government before 30th April of a financial year. Failure to obtain registration within 30 days from the date of commencement of business will attract a penalty of INR 1000.
If an entity is registered as Employers of establishments defined under the Karnataka Shops and Commercial Establishments Act, 1961, the following tax amount will be applicable:
• If no employee is employed by the entity- nil
• If up to 5 employees are employed- INR 1000
• If more than 5 and less than 10 employees are employed- INR 1500
• And if more than 10 employees are employed- INR 2500
No Professional tax is payable by persons who have attained age of 65 years and if the person is a resident of Karnataka, age limit is 60 years and no professional tax is levied on persons employed for less than 120 days in an year.
b) Professional Tax Employee Registration — Certificate of Registration (RC)
This registration is mandatory for the employers employing persons with salary or wages for INR 15000 or more and for obtaining this registration, an employer must have EC. Also, every employer with RC must file a return within 20 days from the end of a particular month in which he has paid Professional Tax. If return is not filed within 20 days, a penalty of INR 250 per month shall be paid till the return is filed. If a person does not obtain RC within the prescribed time limit, a penalty of INR 5 per day will be imposed.
If Professional is not paid on time in Karnataka, the same will attract simple interest @ 1.25 % per month and an additional amount of maximum 50% of the total amount of tax due may be imposed by the Karnataka authority as well.
How to register?
A person in Karnataka can get himself registered for professional tax on the website e-PRERANA. This website also allows users to file their returns and make payments for professional tax electronically. All the services offered by the website are displayed under the head e-services on the home page of the site. A person can select any service and can apply for the registration accordingly. The documents required for registration process include PAN card, rental agreement, bank statement, Identity and address proof of directors etc.
For the existing Professional Tax payers, new EC and RC numbers are being generated.
A person can download the EC online and a new registration application can also be submitted online.
The status of the application can also be tracked on the website.
If a person is already registered, username and password of the employer is required to login .
A user can submit the return and make the payment for profession tax directly without the need to login if he is an already enrolled professional.
If he wants to make a new enrollment or registration application, it can be submitted online and the certificate can be downloaded online once approved by the authorities. Looking for Professional tax registration in Karnataka ?? call S. Kumar @09902977233 or visit our website www.saiconsultingservices.com