The Kerala Panchayat Raj (Profession Tax) Rules, 1996 / Professional Tax Registration

Professional Tax is a tax levied and collected by the local municipal authorities in India like Panchayat, Municipalities and Municipal Corporations. The professional tax is come under the preview of THE KERALA PANCHAYAT RAJ (PROFESSIONAL TAX) RULES 1996. Every Establishments who have been appointed, working or holding office for salary or wages in any office or company or firm or enterprise or establishment or institution or receiving income from deposits and those having half -yearly income not less than Rs. 12,000/- must register under Professional Tax in Kerala. Professional tax registration and return filing services will provide by Professional Tax is handle by the revenue department of Local Self Government. Professional Tax is one of the major income of LSGD’s in India.
Professional Tax compliance is mandatory for every commercial and non-commercial establishments and all forms of business like sole proprietor, partnership firms, private limited companies and Limited Liability Partnerships (LLP).

Applicability of Professional Tax is based on ” Transacts Business

  1. The doing of acts or business of whatever nature whether isolated or not, such as soliciting, obtaining or transmitting orders or buying, making, manufacturing, exporting, importing, receiving, transmitting or otherwise dealing with goods
  2. Where for the purpose of transacting business, within the Panchayat area a company or person has an office or an agent the company or person shall be deemed to transact business within the Panchayat area whether or not such office or agent has power to make binding contracts on behalf of the company or person, and person in charge of such office or the agent or firm, as the case may be, shall be liable for the tax payable by the company or person;
  3. A company or person otherwise liable to pay profession tax under Sections 204 and 205 shall not cease to be liable to such tax by reason only if its or his head office or the place from which its or his business is controlled being situated outside the Panchayat area or by reason only of the fact that its or his transactions are closed outside the Panchayat area;

Explanation : A company shall be deemed to have transacted business and a person shall be deemed to have exercised a profession, art or calling or held an appointment within a Village Panchayat area if such company or person or persons has an office or place of employment within such Village Panchayat area.

Professional Tax Registration in Kerala

Every person who is a proprietor, partnership firm, private company or any form of organization who is liable to pay and deduct professional tax from its employees must bring registration within 30 days. In Kerala, D & O Trade License issued by the local government is compulsory for professional tax registration and Professional Tax payment.

Documents required for Professional Tax Registration

  1. PAN of the Applicant
  2. D & O Trade License issued by LSGD
  3. Address Proof and ID Proof of Applicant
  4. Property Tax Receipt of Building
  5. Affidavit of the Authorized Person
  6. Partnership Deed, MOA / AOA / Certificate of Incorporation
  7. List of Employees with salary details

Professional Tax Rates, Collection Procedure and Payment

For the purpose of charging and collecting professional tax, employee can be grouped into categories according to the amount of total income accrued in a half yearly basis. In all other cases the liable person who engaged in self employment, companies and those transacting business must pay the maximum professional tax at RS. 1,250/- on half – yearly basis. The maximum professional tax deduction from a person is Rs. 2,500/- per annum. In Kerala, a D & O Trade license issued by the health department of local LSGD is mandatory for pay the professional tax. Every person who liable to deduct the professional tax must pay the tax along with the half yearly return. The professional tax deducted and paid to the LSGD is available as deduction under Income Tax Act 1961.

Find the Existing Professional Tax Slab Rates in Kerala

Professional Tax Payment ( Due date) and Return Filing

Every person who liable to deduct the professional tax as per the act must deposit the collected amount on concerned account along with the return containing the income and professional tax deduction details.

The payment and return filing are half yearly basis. Due date of first half  (April to September ) is August and Second half (October to March ) is February. All Statements made, returns furnished or accounts or documents produced, in connection with the assessment of profession tax by any company or person shall be treated as confidential and copies thereof shall not be granted to the public. We can avail professional tax paid amount as exemption at the time of Income Tax Return Filing.

How to Register under Professional Tax in Kerala

In Kerala, professional tax registration must requires the D & O Trade License issued by the Health Department of Panchayat, Municipality and Municipal Corporations. To pay Professional tax , one must register for D & O Trade License. In Kerala there is no online process for professional tax registration, the applicable person must submit a manual application before the revenue department of the concerned LSGD. The primary basis of Professional Tax payment and return filing is based on D & O Trade License issued by the Local Panchayat.

Assessment by Local Panchayat, Municipality and Corporation

Assessment of Profession tax for Traders, Institutions and Self Earning Professionals

A comprehensive list of all traders and self earning professionals in the Corporation limits is created by the department through Bill Collectors and Revenue Inspectors. This list will also have an assessment of the Professional Tax. This assessment is done by a judgment that the BC makes based on his estimation of the turnover of the establishment.
Assessment of Profession tax – EmployeesThe Corporation will give notice every half year, requesting every head of office and employer to assess the profession tax of all employees liable to pay the profession tax in their institution and to remit the profession tax in respect of every self-drawing officer.

Exemptions from Professional Tax deduction

  1. Parents of children with permanent disability or mental disability.
  2. Members of the forces as defined in the Army Act, 1950, the Air Force Act, 1950 and the Navy Act, 1957 including members of auxiliary forces or reservists, serving in the state.
  3. Badli workers in the textile industry.
  4. An individual suffering from a permanent physical disability (including blindness).
  5. Women exclusively engaged as agent under the Mahila Pradhan Kshetriya Bachat Yojana or Director of Small Savings.
  6. Parents or guardians of individuals suffering from mental disability.
  7. Individuals, above 65 years of age.

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