Professional tax is a direct tax levied on persons earning an income by practicing a profession, employment, calling, or trade. Unlike income tax imposed by the Central Government, professional tax is levied by the government of a state or union territory in India. The tax calculation and amount collected may vary from one State to another, but it has a maximum limit of Rs. 2500/- per year.
Incorporation Process
The incorporation process for professional tax involves the following steps:
Determine the professional tax applicability based on your profession, trade, or employment.
Register for professional tax with the state government or union territory where your business is located.
Obtain a professional tax registration certificate.
Deduct the professional tax from the salary/wages of salaried and wage earners and deposit the same to the state government.
Pay the professional tax liability if you are not a salaried or wage earner.
Documentation and Other Considerations
Professional tax is applicable to individuals, Hindu Undivided Family (HUF), companies, firms, co-operative societies, associations of persons, or a body of individuals, whether incorporated or not.
Professionals earning an income from salary or other practices such as lawyers, teachers, doctors, chartered accountants, etc. are required to pay professional tax.
In the case of salaried and wage earners, the professional tax is liable to be deducted by the employer from the salary/wages, and the same is to be deposited to the state government.
In the case of other classes of individuals, this tax is liable to be paid by the employee himself.
The tax calculation and amount collected may vary from one State to another, but it has a maximum limit of Rs. 2500/- per year.
In conclusion,
professional tax is a direct tax levied on persons earning an income by practicing a profession, employment, calling, or trade. The incorporation process involves determining professional tax applicability, registering for professional tax, obtaining a professional tax registration certificate, deducting the professional tax from the salary/wages of salaried and wage earners, and paying the professional tax liability if you are not a salaried or wage earner.
Professional tax is applicable to individuals, Hindu Undivided Family (HUF), companies, firms, co-operative societies, associations of persons, or a body of individuals, whether incorporated or not
Documents Required
- Incorporation Certificate