The prevailing myth in society is that professional tax is deducted only from salaried employees. But, this is not the truth! If you have other sources of income than this, then you will be liable to pay professional tax.
What is Professional Tax?
A profession tax is a direct tax that is imposed on people who are either professionals, employed, or running a business. The central government imposed income tax but professional tax is levied by the state government or union territory government. Professional tax is similar to income tax, just as there is a slab in income tax regarding the percentage of the amount deducted from monthly or annual earnings like 10 percent on 2.5 lakh to 10 lakh, then it will be different for 5 lakh & above and for 10 lakh & above. If we talk about professional tax, then there are slabs on it and there are divisions in it. Now the deduction can be annual or can be monthly, it depends on different states and the state government decides how it will be implemented and deducted. Generally, tax is deducted from the earnings of employed people or any source of income.
You must know that this amount is deducted monthly from your salary, which is a standard deduction of Rs 200 towards your professional tax. And those 200 rupees which are deducted, they are deducted for 12 months and 300 rupees are deducted in the last month i.e. February. But it is not fixed as the state government is different for every state and they can deduct it according to different parameters, state-wise. The maximum amount that can be imposed under this tax will be restricted to Rs 2500 only. Hence, it cannot be deducted more than Rs. 2500 as a professional tax annually.
Difference Between PTEC & PTRC?
PTEC stands for Professional Tax Enrollment Certificate. Any individual, whether artificial or human individual, is covered under PTEC. The deduction amount of this tax is Rs. 2500 per annum if it is a company, individual, or partnership. In other words, when the employer pays his own tax, it is called PTEC.
PTRC refers to Professional Tax Registration Certificate. An employer registered itself to PTRC for deducting professional tax from the employee’s salary to pay the state govt. respectively and the monthly deduction amount can be Rs. 150 to Rs. 200.
Hence, the amount deducted from the employee’s wages is known as PTRC and the amount that employers paid for themselves to the state govt. is called PTEC.
PTEC & PTRC QNAs
Who is required to register to PTRC?
Every Employer is required to deduct the tax from the salary or wages of the employee when there is two more employees.
Who is required to have PTEC Registration?
The person who starts a business or practice is required to take the registration.
When is PTEC required to obtain?
When a person is employed in a profession by two or more employers and is getting salary wages exceeding Rs. 5000 but if an employer is not deducting professional tax then the indivia=deal need to get an enrolment certificate from the authority.