Every individual who earns any sort of income in Punjab is mandated to partake in the professional tax payment. Although this tax is tagged “Professional”, it doesn’t mean that only those in one profession or the other should pay it. It is not reserved for professionals such as lawyers, doctors, nurses, teachers etc. It is a tax which every individual in the State who are working or earning from his/her business should pay.
There is usually a difference in the amount, rates or tax slabs for taxpayers depending on the State where they reside. However, the amount capped as the professional tax is INR 2500 every year for every taxpayer. The Law governing the professional tax in Punjab can be found in The Punjab State Development Tax Act of 2018. This Act became effective from 19th April 2018.
After reading this article, you will learn all the important information about the state professional tax payment.
Individuals Liable for a Professional Tax Payment
All the people that fall under the following categories are liable to pay a professional tax
- Every employee is liable to pay his tax. The employer is responsible for deducting a particular amount from the salaries which will be turned over to the Government as a professional tax.
- Under the directives of the PSDTA, any employee who is working in more than one organization can register themselves and pay the tax personally to the Government. However, he/she must first declare his intent to his employers to avoid deductions of the tax from his/her salary.
- As for professionals, businessmen and women, they are permitted to register under their State government and pay their professional tax as stated in Section 6 of PSDTA of 2018.
Individuals Not Liable for Professional Tax Payment
Even though the tax is mandatory for every earning individual in the State of Punjab, there are some exceptions to the act. Some of the individuals who are left out of the tax are:
- Farmers or other individuals who earn their income through Agricultural activities.
- Senior Citizens
- Casual workers who don’t have a steady income.
The Authority in Charge of Professional Tax Payment
To make sure that The Punjab State Development Tax Act of 2018 is successfully implemented, the State Government puts an Appellate Authority to be the commissioner of the Act. There are also officers who are appointed to work alongside the Commissioner to achieve the purpose of the Act. Based on the provisions for his appointment, the commissioner shall preside over each area in Punjab. He can also delegate his powers or duties to an officer under him but with conditions and restrictions.
Registration & Enrolment
It is mandated that all the liable individuals or employers for the professional tax payment should collect their Certificate of Registration from the Officer in charge of their area or the Commissioner.
Every taxpayer who will pay his professional tax personally (not by his employer) must collect an enrolment certificate for the officer in charge as stipulated in the PSDTA.
The Officer who is issuing the certificate will state the tax amount which the holder of the certificate should return to the Government based on the date and the payment schedule in the enrolment certificate.
If an Employer Fails to Deduct the Amount for the Professional Tax
Employers are obligated to deduct a particular amount from the salaries of the employees and pay to the Government. However, if an employer fails to deduct the tax or even fail to remit the tax to the Government after deducting it, he will face some liabilities. According to the Act, such an employer will be charged to pay a two percent interest every month on the tax amount which he did not remit to the State of Punjab. He will continue to pay this interest till the time he pays the whole pending tax amount left unpaid.
Required Documents to Register for the Tax Payment.
For an individual or employer who wants to register for paying the Professional Tax, he/she must provide the following documents to the authority in charge:
- A copy of your PAN Card.
- Documents that prove the establishment of your business such as Certificate of Incorporation, AOA & MOA, Partnership Deed if the business is owned by two people and any other document that can serve as evidence.
- A document showing where the Partners, Proprietor or Director is residing such as Voter Card, Passport, Aadhar card, Driving License or Electricity Bill.
- Proof of where your business is located. Documents such as Property Card, Leave & License Agreement, Electricity Bill, Agreement of Builder, Rent Receipt or NOC Letter.
- Establishment Certificate
- Cancelled Cheque.
Rate to be paid as Tax
The tax rate for different categories of people as stated in the PSDTA 2018 are:
- 200/-per month is for every citizen who is liable for the Head Income from individuals wages provisions of the Income Tax Act of 1961.
- 200/-per month for every individual who is liable to pay a head Income from his Business and Profession under the Income Tax Act of 1961
Penalties for failing the Professional Tax Payment
Based on the provisions of the Act, such penalties as listed below are enforceable against individuals who fail professional tax requirements.
- INR 50/daily for delayed registration or delay in enrolment.
- INR 5000/daily for providing false information to the authorized body
- INR 50/daily for individuals who fail to maintain their documents or accounts as required by the Act.
- INR 5000 for non-compliance to any provision as stated in the Act and INR 50/ daily for continuing in the act.
The professional tax payment is for every individual who has one means of earning an income or the other. It is for both employees and business owners. However, the few people who enjoy tax exemption in Punjab are the senior citizens and casual workers who don’t have a fixed source of income.