PROFESSIONAL TAX RETURNS: MAHARASHTRA PROFESSIONAL TAX: TAX RATE

PROFESSIONAL TAX RETURNS

PROFESSIONAL TAX RETURNS: MAHARASHTRA PROFESSIONAL TAX: TAX RATE

Many salaried employees might be very well aware of the term ‘professional tax’ as it would have been mentioned in the pay slips/Form 16 issued to them. But all of them may or may not understand what it is and why is it appearing in their pays slips/Form 16 as a deduction from their salary income. Hence, this article is an attempt to provide a better picture of what is ‘Professional tax’ and why is it deducted and is it only salaried class who are bearing it

Professional Tax Return Through Taxcure India

What is Professional tax and who levies it?

The nomenclature ‘Professional tax’ could be one of those terms which do not completely convey the real meaning of the term. Unlike the name suggests, it is just not the tax levied only on professionals.

Professional tax is a tax on all kinds of professions, trades, and employment and is levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on the business including freelancers, professionals, etc., subject to income exceeding the monetary threshold if any.

As per Article 246 of the Constitution of India, only Parliament has the exclusive power to make laws with respect to the Union List which includes taxes on income. The state has the power to make laws only with respect to the Concurrent and state list.

However, professional tax though is a kind of tax on income levied by the state government (not all states in the country chose to levy professional tax). The state government is also empowered to make laws with respect to professional tax though being a tax on income under Article 276 of the Constitution of India which deals with tax on professions, trades, callings and employment.

It may be noted that professional tax is a deductible amount for the purpose of the Income Tax Act, 1961 and can be deducted from taxable income.

Professional Tax Rate

Professional tax being levied by the state government is different in different states. Every state has its own laws and regulations to govern the professional tax of that particular state. However, all the states do follow a slab system based on income to levy professional tax.

 Further, Article 276 of the Constitution which empowers the state government to levy professional tax also has provided for a maximum cap of Rs 2,500 beyond which professional tax cannot be charged to any person.

Professional Tax Applicability in Maharashtra

• Professional tax in Mumbai applies to the following categories of individuals:
• Hindu Undivided Families (HUFs)
• Individuals
• Company/Association of person/Co-operative Society.

Furthermore, only employers of salaried individuals are liable to pay such taxes on behalf of their employees. In this process, the employer deducts a certain amount of tax from the salary and deposits it to the municipal corporation.

Professional Tax Slab Rate in Maharashtra

The calculation of professional tax depends on your salary and predetermined tax rates. You may have to pay something between Rs 200 to Rs 2500 per month. For complete details, look at the table below:

Maharashtra Professional Tax Exemption

• Senior citizens aged 65 years and above.
• Parents of physically challenged children
• Individuals having more than 40% disability
• Badli workers of the textile industry

Professional Tax Fines & Penalties

While the actual amount of penalty or penal interest may depend on respective State’s legislation, the penalty is being levied by all such states for not registering once professional tax legislation becomes applicable. Further, there are penalties for not making the payment within due date and also failing to file the return within specified due date.

Maharashtra Professional Tax Fines and Penalties

Non-compliance under Professional Tax regulations in Maharashtra could attract heavy penalties or fines.

The penalty for Not Obtaining Professional Tax Registration

A penalty of Rs.5 per day of not obtaining professional tax registration (PTRC) in case of an employer and Rs.2 per day in case of a person (PTEC) is applicable.

The penalty for Late Filing of Return 

The Late filing of professional tax return attracts a penalty of Rs.1000 due before the filing of the return. The penalty amount is payable in addition to any amount payable as per the return.

The penalty for Late Payment     

The Late payment of professional tax dues can be penalized with a penalty of 10% of the tax due. Further, interest on late payment can be charged at up to 1.25% per month.