Professional Tax

It is a tax on all kinds of professions, trades, and employment and levied based on the income of such profession, trade and employment. It is levied on employees, a person carrying on business including freelancers, professionals, etc., subject to income exceeding the monetary threshold if any. Professional tax though is a kind of tax on income is levied by State Government (not all states in the country chose to levy professional tax).

Persons liable to pay professional tax:

  1. For employees, Employer has to deduct from employee salary and, pay the tax
  2. Employer (corporates, partnership firms, sole proprietorship etc) also being a person carrying on trade/profession is also required to pay professional tax on his trade/profession again.
  3. Persons who are carrying on freelancing business without any employees are also required to register themselves and pay the tax.

Documents Required for Registration:

  • Memorandum of Association
  • Articles of Association
  • PAN Card.
  • Aadhar card
  • Lease Agreement
  • Employer Address Proof and ID Proof with photos.
  • Board resolution for authorized signatory
  • The number of directors and the photos and proof of residence of the Proprietor, Managing Partner, Managing Director.
  • The number of employees and their details.
  • Bank details with a cancelled cheque
  • Sale deed / Rental agreement / Lease deed / No objection certificate in the case of rent-free places of business.

Professional Tax Registration and Returns:

The registration and returns can be done by Online/offline

Slab rates in Telangana:

Salary/ Wage Tax
Monthly salary/wage upto Rs 15,000 NIL
Monthly salary/wage between Rs 15,001 – Rs 20,000 Rs 150 per month
Monthly salary/wage > Rs 20,000 Rs 200 per month

Consequences of violation of professional tax regulation:

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