What is Professional Tax?

Professional Tax is imposed by the State Government and is collected from individuals working in Government, Private and Non-Government organizations, NGOs. The taxes are subject to revision each financial year. The highest amount of professional tax charged in India is Rs 2,500. Professional tax is based on the income level of an individual and is subject to minimum income level. Professional tax slab rates differ across states. In India, professional tax is levied as per the Article 276, Clause 2 of the constitution.

Karnataka Professional Tax:

The Karnataka professional tax is usually a slab amount based on the gross income of an individual and is deducted from the salary each month. All working and self-employed professionals whose monthly income is above Rs 15,000 must pay Professional tax in Karnataka. Professionals earning less than Rs 15,000 each month need not pay professional tax to the Karnataka Government.

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Professional Tax Employer Registration:

This is a type of registration meant for all businesses, regardless of the number of employees. This registration is certified by the Certificate of Enrolment and is issued by the Professional Tax Office. The document will include details of the tax payable by the employer and the stipulated date of payment. Failure to remit the tax within specified date may lead to the entity, having to pay an additional late fee or penalty.

The tax rates of businesses that are registered under the Karnataka shops and commercial establishment act, 1961, are specified in the Section below. It must be noted that the tax rates of these establishments are determined based on the strength of the employees.

No employees – No tax implications.

One to five employees – Rs 1,000.

Five to ten employees – Rs 1,500.

More than ten employees – Rs 2,500.

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Professional Tax Employee Registration:

The professional tax employee registration is a registration where an individual must register himself and pay the required taxes, if he is earning income through salary. It is an employee’s obligation, but is met by the employer or the firm. Employers are required to register employees by remitting professional tax dues, which can be deducted from the salary of the employee. All employees earning more than Rs 15,000 a month qualify for the payment; businesses employing such personnel must obtain the Professional Tax Employee Registration. This registration is certified with a Certificate of Registration, which can be obtained by employers who are in possession of the Certificate of Registration.

See Also: GST Tax Rates In India

Who pays Professional Tax in Karnataka?

Professional taxes are paid by both salaried employees as well as self-employed. As the name suggests, the taxes are collected by the Karnataka State Government. For salaried employees, professional tax is levied by employers whereas non-salaried professionals must pay it to local authorities appointed for collecting professional tax. Individuals who are engaged in private professions like doctors, lawyers, chartered accounts and any other profession are liable to pay professional tax in Karnataka. Listed below are the categories on which Professional Tax is applicable in Karnataka:

Hindu Undivided Families

Companies and other corporate bodies

Society

Club or association

Firms

Corporations

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How to pay Professional Tax in Karnataka?

For salaried professionals the professional taxes are deducted by employers from the salary each month and then paid to the concerned authority. Self-employed professionals, who do not work with any organization, need to pay this tax by contacting the local Professional Tax office established for collecting taxes.

Karnataka Professional Tax Slab Rates 2018-2019:

The professional taxes are subject to revision each financial year. The taxes that need to be paid by professionals are determined based on the salary they receive. Below are the professional tax slab rates for the financial year 2018-19.

If employee’s salary is below Rs 15000 - nil

If employee’s salary is above Rs. 15000 – Rs 200.

Karnataka Professional Tax E-Payment:

A professional tax payer can pay the professional tax online by visiting the official website. The website allows taxpayers to submit tax returns and make tax payments by entering their personal and financial details. Taxpayers can also generate the certificate of Tax Payment online, without contacting the offices of professional tax. The website helps professional tax payers as they can now pay taxes from the comfort of their home on monthly, quarterly and annual basis.

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Karnataka Professional Tax Late Payment Penalty:

An individual paying professional tax is charged 1.25% a month for late payment of taxes in Karnataka. The maximum penalty charged for late payment is 50% of the total outstanding amount.

Exemptions:

Listed below are the categories of people who are out of the scope of the professional tax in Karnataka:

People running higher secondary schools or educational institutes.

Charitable and philanthropic hospitals.

Nursing homes located below the Taluk levels in every district of the State except for Bangalore.

Salaried or wage earning citizens who are blind, deaf or dumb

Permit holders of single-taxi or three-wheeler vehicles.

Institutes rendering courses for Kannada or English Shorthand or Typewriting.

Citizens belonging to Central Para Military Force

People who are diagnosed with at least 40% of permanent disability.

Ex-servicemen not bracketed under SI No.1 of the Schedule.

Combatant and civilian non-combatant members of defence who are administered by the Army Act, the Navy Act and the Air Force Act.

Directors of Companies registered in the State of Karnataka; duly nominated by the financial agencies owned or controlled by the State Government or other statutory bodies.

Parents of a single child who underwent a sterilization operation. The taxes are exempted when supported by documents certified by district surgeon or government civil hospital.

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