Guide to Punjab Professional Tax

Professional tax is a form of tax imposed on people who earn their income by any means by the state governments. This tax should not be mistaken for its name, because the term ‘ professional’ normally refers to people like doctors, lawyers and others. Professional tax in Punjab shall be paid by every earner of the state who is either an employee or looking for any business or profession.

The tax slabs, rates and amounts collected from the taxpayers may vary by state, but are limited to INR 2500 per year for each individual. The Punjab State complies with the professional tax laws laid down in the Punjab State Development Tax Act, 2018, which was implemented on 19 April 2018. This article is intended to inform the readers about Punjab professional tax.

LIABLE INDIVIDUALS

  • The employer would deduct an amount from the salary as part of the professional tax deduction in the case of an employee and direct the payment to the Government.
  • According to Punjab State Development Tax Act, 2018, if the employee is employed under more than one employer, the employee shall be entitled to pay the government his share of professional tax by registering. Once the employee has made a declaration to the employers about the same, the employer is not liable to deduct any tax from the employee’s salaries.
  • In the case of persons engaged in a business or occupation, the individual is responsible for paying taxes under the state government as required by Section 6 of the Punjab State Development Tax Act 2018.

EXEMPTED INDIVIDUALS

The individual working in Punjab exempted from paying professional tax are:

  • Senior Citizens
  • People who earn wages on a casual basis
  • Individuals who are completely reliable on agricultural activity for making an income.

ACTING AUTHORITY

In order to ensure the proper functioning of the law and the successful implementation of this Act, the Government may appoint an appealing authority as the Commissioner and shall be assisted by officers according to the objective. The Commissioner is competent in all areas of the state of Punjab. The Commissioner has the right to delegate any of his powers and duties to any officer appointed for the purpose due to restrictions and conditions.

REGISTRATION AND ENROLLMENT

  • Any employer or individual who is responsible for paying taxes must obtain a Certificate of Registration from the Commissioner or designated Officer in the manner prescribed.
  • Any person who is liable to pay tax under this Act (except a person earning a salary or a salary for whom the fee is payable by his employer) must obtain a registration certificate from a designated officer in the manner prescribed in the Act.
  • The designated officer would mention in each registration certificate the amount of tax payable by the certificate holder according to the schedule and the date of the alleged payment.

FAILURE TO DEDUCT PROFESSIONAL TAX

If an employer fails to deduct professional tax at the time of payment of the salary or fails to pay the fee as required by or in accordance with this Act, In addition to the amount of tax, he / she is liable to pay a simple interest at a rate of two percent of the amount of the tax pending for each month or for the period for which the charge remains unpaid.

NECESSARY DOCUMENTS FOR TAX REGISTRATION

The documents given below are required for registering for professional tax:

  • Self attested copy of PAN card
  • Evidence of business establishment such as Partnership Deed, Incorporation Certificate, MOA & AOA or any other similar evidence.
  • Residence proof of partners, proprietor or director such as Passport, Driving License, Voter Card, Aadhar Card and Electricity Bill.
  • Proof of business location such as Electricity Bill, Property Card, Builder Agreement, Leave and License Agreement or letter of NOC and Rent Receipt.
  • Establishment certificate
  • Cancelled cheque

RATE OF TAX

The tax rate set out in the Punjab State Development Tax Act of 2018 is as follows:

  1. Every individual who is an assessee under head income from wages s per income tax act 1961 is 200 Rs per month
  2. Every individual who is an assessee under head income from business and profession as per income tax act 1961 is 200 Rs per month

APPLICABLE PENALTIES

The penalties for varying reasons are given below

  • Delay in Registration or Enrolment: INR 50 per day
  • False Information: INR 5000 per day
  • Willing failure to maintain provision- related accounts and documents: INR 50/- per day.
  • Non- compliance with any of the provisions of the Act: INR 5000/- plus INR 50/- per day if the same continues.

No penalty shall be imposed under this section without giving the employee a reasonable chance to be heard.

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