What is the day we all wait for in our corporate lives?
Indeed, Salary day is something which excites us all and hence comes the pay-slip. If you take a thorough glance at this payslip, it consists of various elements. In this blog, we will run through the most significant element of this payslip, which is ‘Professional tax”.
Many salaried employees might be very well aware of the term ‘professional tax’ as it would also have been mentioned in Form 16 issued to them. But all of them may or may not understand what it is and why is it appearing in their pay-slips/Form 16 as a deduction from their salary income. So, this article is an endeavor to give a better picture of what is ‘Professional tax’ and for what reason is it deducted, and is it just salaried class who are bearing it.
- What is Professional Tax?
- What is Jharkhand Professional Tax Act?
- What is Professional Tax Registration?
- What is Payment of Tax?
- What is the Professional tax rate?
- What are the Exemptions of Jharkhand Professional Tax?
- Which other states have applied Professional tax?
- What are Offences and Penalties under this Act?
- What is a Refund of Excess?
- Who is responsible to collect professional tax?
- Who is responsible to deduct Professional Tax?
- As per the Constitution of India Applicability of Professional Tax
What is Professional Tax?
The terminology ‘Professional tax’ could be one of those terms which does not totally convey the real meaning of the term. Unlike the name suggests, it is just not the tax levied only on professionals. It is a tax on all kinds of trades, callings, professions, and employment and levied based on the income of such profession, trade, and employment.
It is collected from workers, an individual carrying on the business including experts, freelancers, and so forth, dependent upon income exceeding the financial limit if any.
According to Article 246 of the Constitution of India, just Parliament has the power to make laws as for the Union List which involves taxes on income. The state has the power to make laws only with respect to the Concurrent and State list.
What is Jharkhand Professional Tax Act?
Profession tax is a State Government tax levied on an individual or body acquiring income via trades, callings, professions, and employment. The State Municipal Corporations collect the professional tax through foreordained slab rates. In addition, the paid tax can be asserted as a deduction from the compensation under Section 16 of the Income Tax Act. Different states cover different rates and methods of collection for professional tax.
In this article, we take a gander at the subtleties of Jharkhand professional tax and its e-payment procedure. The Jharkhand Tax on trades, callings, professions, and employment Act, 2011 administers the levy of tax applies to the entire state of Jharkhand.
The Jharkhand State Tax on Professions, Trades, Callings and Employment Act, 2011 (commonly known as Profession Tax Act) came into force with the object of levying tax on professions, trades, callings, and employments. It applies to the whole state of Jharkhand.
- Who should pay the Professional tax?
Each individual who is involved with any employment, calling, trades, professions, or executing business for at least 120 days in a year is liable to pay the imposed tax. The collected tax is utilized to support the scheduled Tribes, scheduled castes, and more fragile sections of the society.
For employees, an employer is an individual capable to deduct and pay professional tax to the State Government subject to the financial limit assuming any given by separate State's regulation.
A business (corporate, association firms, sole ownership, and so on) likewise being an individual continuing exchange/calling is additionally needed to pay professional tax on his profession/trade again dependent upon the monetary threshold assuming any given by separate State's regulation.
In such a case, the business needs to enlist and get both a professional tax registration certificate to have the option to pay professional tax on his profession and a professional tax enrollment certificate to have the option to deduct the tax from his workers and pay.
Further, separate registration might be needed for every office relying upon the respective State's regulation. The liable people to pay Professional Tax are separated into two classes.
Employer: The business (Public and Private Sectors, Government) is obligated to deduct the Profession Tax from the compensations or wages of the salaried people and workers and deposit it with the State Government. The business on behalf of all workers should pay the tax within fifteen days from the finish of the quarter.
Assuming the business is an official of the State Government or the Central Government or the particular Government endeavors, or Public Limited organizations, the tax ought to be deposited in a predefined manner.
Employees: The individual or the worker himself enjoyed any business, profession, calling and exchange is liable for paying the tax from the compensation or wages.
As we probably are aware professional taxes apply to professions like, legal counselors, managers, chartered accountants, etc. So assuming that the employer pays the professional tax, he must deduct the professional tax from the compensation of workers. Also, pay to add up to the concerned department.
He/she needs to document a return in the department at the given time. The return ought to incorporate the proof of tax payment. If it's not encased then the return should be invalid.
- What do Salary and wages include?
· Dearness Allowance, pay and some other sum paid as allowance.
· Compensations got in cash or some other kind on regular basis.
· Perquisites, profits and • Honorarium in lieu of compensation
· Leave encashment amount
· Leave concessional pay, resource allowance.
- What do Salary and wages exclude?
. Medical reimbursement
· Repayment of transport charges, traveling remittance
· Compensation paid to student under Apprentices Act, allowance paid to intern
· Gratuity, bonus, and ex-gratia payment.
· Pension allowed to a worker isn't considered as salary. Subsequently, a beneficiary isn't responsible to pay Professional Tax on the annuity.
What is Professional Tax Registration?
Professional tax is a tax that is levied by the state government. It applies to those people or salaried workers like Chartered accountants, legal advisors,s and specialists. For this Tax, you need to register your firm or business within 30 days, or then again if you're professionals you need to register within 30days as well. This tax is deducted from compensation or wages according to the state.
In the event that there is a delay in registration, you need to suffer the consequence of X rs each day according to the state government rules. Professional tax is required in professions and businesses.
There are two kinds of forms for professional tax registration
Form I- For employer
Form-II- For self-employed person
Documents Required: Start By Filling out a form. Fill out the form to begin the registration process. Fill every one of the subtleties that are required.
Present The Required Documents: Send every one of the documents that are required, through mail or physically
Documents Submission: After document submission official deals with the process
Complete Registration: As the process is completed government sends you the documents
What is Payment of Tax?
The tax amount due from the assesses for each quarter as determined in their registration certificate will be paid;
(a) preceding 30th June; in regard of a selected assesses preceding the beginning of a year or is registered at the latest the 31st May of a year;
(b) within one month of the date of registration in regard of an assesses who is registered the 31st May of a year; in the recommended way; and
(c) for any Other such assesses, other than the assesses mentioned in entry no. 1 of the Schedule; by the fifteenth day of the month after the expiry of a quarter.
This is a State-specific situation. Notwithstanding, a professional tax might be paid either on the web/physically. Further, contingent upon the State's prerequisite, professional tax returns likewise should be documented at determined intervals.
How is the E-Payment of Jharkhand Professional Tax done?
The Department of Commercial taxes under the Government of Jharkhand works with online payment of professional tax for its residents through the e-payment online gateway.
Stage 1: To make e-payment of Jharkhand profession tax, visit the authority site of the e-payment gateway.
Stage 2: The web-based payment page shows up. Select the tax type as profession tax, and enter the necessary subtleties that incorporate the following.
· Payment details
· Firm details
· Address details
· Purpose behind payment (penalty, tax fee, appeal, etc. )
Stage 3: Enter the captcha, make fundamental payment and submit.
What is the Professional tax rate?
The professional tax levied by the State Government is different in various states. Each state has its own laws and guidelines to administer the Professional tax of that specific state. In any case, every one of the states truly does follow a slab system in view of the income to levy tax.
Further, Article 276 of the Constitution which authorizes the State Government to levy professional tax likewise has accommodated a most extreme cap of Rs 2,500 past which professional tax can't be charged on any individual.
Which other states have applied Professional tax?
There are different states who have imposed professional tax like Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chattisgarh, Kerala, Meghalaya, Orissa, Tripura, and Madhya Pradesh.
What are the Exemptions of Jharkhand Professional Tax?
· The individual employed with the Union Ministry of Home Affairs, Union Ministry of Defense, or Border Security Force is absolved from the payment of tax under this act.
· Individual with a long-lasting physical disability
· Guardians of an individual who suffers from physical disability or mental disability.
· Senior resident over the age of 65 years
What are Offences and Penalties under this Act?
Any assesses who neglects to follow any of the guidelines of the Act will be rebuffed with a fine amount between 500 rupees and 5,000 rupees. Assuming the offense proceeds, a fine of ten rupees per day during the time of the duration of the offense will be imposed.
· Delays in getting Registration Certificate, a punishment of Rs. 5/ - each day.
· In the event of non/late payment of professional tax, the fine will be 10% of the sum of tax how.
· In the event of late filing of returns, a fine of Rs. 300 for each return will be forced.
Assuming an assesses fizzles, without sensible reason to make payment of any measure of tax within the time determined in the notice of demand, the recommended authority may, in the wake of offering him a sensible chance of making his justification, forced upon him a penalty which will not be under fifteen percent however not surpassing 25% tax amount due.
While the real amount of penalty might rely upon the respective State's regulation, a penalty might be imposed by all such states for not registering once professional tax legislation becomes pertinent.
Further, there are also penalties for not making the payment within the due date and also failing to file the return within the specified due date.
What is a Refund of Excess?
· The recommended authority will refund to the assesses how much tax, penalty interest, or other sums, if any, is paid by such assesses in the abundance of the amount due from him.
· The refund might be made either with cash or, at the choice of the assesses by deduction of such excess from penalty interest, amount of tax, or other amount due in regard of some other period
· Given that, the recommended authority will initially apply such excess towards the recovery of any sum due in regard of which a notice under section 9 has been served, and will then, at that point, refund the balance, if any.
Who is responsible to collect professional tax?
Professional tax is collected by the Commercial Tax Department. The commercial tax department of the respective states collects it which eventually arrives at the fund of the municipal corporation.
Who is responsible to deduct Professional Tax?
The employer is liable for the tax deduction from the worker's compensation. Furthermore, employers need to submit taxes within the 30days with the tax proof.
As per the Constitution of India Applicability of Professional Tax
Article 276 of the Constitution of India sets out that "there will be imposed and collected a tax on trades, callings, professions, and employment, as per the arrangements of this Act. Each individual employed with any trades, callings, professions, and employment, and falling under either of the classes referenced in the second section of the Schedule will be obligated to pay to the State Government tax at the rate referenced against the class of such people in the third section of the said Schedule.
Given that section 23 in the Schedule will apply just to such classes of people as might be determined by the State Government by notice now and again."
Professional tax is similar to Income Tax. Income Tax is collected by the Central Government and Professional Tax is collected by the State Government. At the point when this tax was first Announced, the most extreme limit on the tax was Rs. 2500(i.e: collected tax is most extreme charged by experts is 2500). This breaking point is professionals in 1949. There are a few revisions on the limit by the state government for raising extra resources.
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· The professional tax can be evaluated by the gross month-to-month income compared to the income slab, according to the state where you are employed.
· It is a Bill to accommodate the levy of tax on trades, callings, professions, and employment in the State of Jharkhand. While, it is convenient to create a fund with the end goal of the advantage of the State towards government welfare towards the schedule tribes, schedule caste and more vulnerable sections of the State and as such to accommodate the levy of tax on trades, callings, professions, and employment.
· Any recommended authority under this Act, may assess and look through any premises, where any trades, callings, professions, and employment obligated to tax under this Act, is continued or is suspected to be continued and may need examination and production of books, registers, record or archives relating thereto and may hold onto such books, registers, records or archives as might be important.