Who is Liable to Pay Professional Tax?

Hello,

Do you want to know, what is professional tax and who is liable to pay professional tax? Let me assist you with this. It is one of those concepts whose nomenclature only partially conveys what the term actually means. Contrary to what the name might imply, it is not a tax that is only applied to professionals.

Professional tax is a tax on all different types of professions, trades, and employment that is assessed depending on their respective revenue. Employees, anyone operating a business, including independent contractors, professionals, etc., are subject to the tax if their income above the applicable threshold.

According to Article 246 of the Indian Constitution, only Parliament has the unique authority to enact laws pertaining to the Union List, which includes income taxes. Only laws pertaining to the Concurrent and State list are subject to state legislative authority.

Professional tax, however, is a type of income tax imposed by the State Government (not all states in the country chose to levy professional tax). Article 276 of the Indian Constitution, which addresses taxes on professions, trades, callings, and employment, grants the State Government the authority to enact legislation relating to professional tax even though it is an income tax.

It should be mentioned that professional tax is exempted from taxable income under the terms of the Income-tax Act of 1961.

Professional tax who is liable to pay?

• Employers are accountable for withholding and paying professional tax to the state government on behalf of their employees, subject to any financial thresholds established by the laws of the respective States.

• Employers (corporations, partnership businesses, sole proprietorships, etc.) who additionally practise their trade or profession are obligated to pay professional tax on such activities, again subject to any monetary thresholds established by the laws of the individual State.

• In this situation, the employer must register and get both a professional tax registration certificate and a professional tax enrolment certificate in order to be able to pay professional tax on his trade or profession and withhold the tax from his employees' salaries.

• Moreover, depending on the laws of each State, separate registration may be necessary for each office.

• People who operate a freelance business without any employees must also register, according to the applicable State's legal requirements for any applicable financial threshold.

• A professional tax levy is however subject to the exemptions that the relevant State grants to specific groups. Parents or guardians of someone who has mental impairment are excused from paying Karnataka professional tax, as are blind people among others.

I would like to conclude here about what is professional tax and who is liable to pay professional tax. I hope this helps:)

Read More: