Professional Tax is a state-imposed tax on individuals earning income through employment, profession, or trade. In Kerala, like many other Indian states, the tax is levied by local municipal bodies under the Kerala Municipality Act and Panchayat Raj Act. While the term “Professional Tax” may suggest that only professionals such as doctors or lawyers need to pay it, the truth is that it applies to a wide range of income-earning individuals, including salaried employees, freelancers, and business owners.
This detailed guide breaks down the core aspects of Professional Tax in Kerala, focusing specifically on the division of responsibility between employers and employees. Understanding who is liable to deduct, pay, and file returns can help you avoid penalties and stay compliant. For comprehensive support in professional tax filing and registration, visit OurTaxPartner.com.
What is Professional Tax?
Professional Tax (PT) is a direct tax levied by the State Government on individuals who earn income through employment or self-employment. The amount of tax and the applicable slabs are determined by the respective state legislation. In Kerala, this tax is collected by local bodies such as municipalities, corporations, and gram panchayats.
The Professional Tax rates in Kerala vary depending on the monthly income of the individual and generally range between ₹100 to ₹208 per month. The tax is collected monthly from salaried employees and annually or half-yearly from self-employed individuals and business owners.
Legal Basis of Professional Tax in Kerala
The Kerala Municipality Act, 1994 and the Kerala Panchayat Raj Act, 1994 empower local bodies to levy and collect Professional Tax. These acts provide guidelines for the assessment, collection, and enforcement of the tax, as well as penalties for non-compliance.
Each local self-government institution (LSGI) — such as a municipal corporation or village panchayat — has the authority to issue notifications regarding the tax structure and deadlines applicable in its jurisdiction.
Who is Liable to Pay Professional Tax?
Liability to pay Professional Tax in Kerala depends on whether the individual is a salaried employee, an employer, or a self-employed professional. Let’s explore each category:
1. Salaried Employees
Employees working in private or government organizations are liable to pay Professional Tax. However, the responsibility of deducting and remitting the tax lies with the employer.
- The employee does not need to register separately.
- The tax amount is deducted monthly from their salary based on income slabs.
- Employers are required to provide Form V to each employee detailing the amount deducted and remitted.
2. Employers
Employers in Kerala have the dual responsibility of deducting Professional Tax from employees and remitting it to the local authority. Additionally, they must also pay professional tax on their own behalf if they fall under the taxable slab.
Employer Responsibilities include:
- Registering for Professional Tax with the respective municipal authority
- Deducting the appropriate amount from each employee’s salary every month
- Filing monthly or bi-annual returns depending on the LSGI requirements
- Paying their own professional tax if applicable
- Maintaining payroll records and tax deduction certificates
For accurate filing and compliance, businesses can consult OurTaxPartner.com for assistance.
3. Self-Employed Professionals and Freelancers
Professionals such as doctors, lawyers, architects, chartered accountants, and freelancers are required to pay Professional Tax annually or semi-annually, based on their income and LSGI requirements.
They must register with their local body, declare their income, and make the required payment by the due date. Failure to comply can lead to penalties and interest charges.
Income Slabs for Professional Tax in Kerala
While individual LSGIs may vary slightly in implementation, the following is a general guideline for monthly salary-based Professional Tax slabs in Kerala:
| Monthly Salary Range (₹) | Monthly PT Payable (₹) |
|---|---|
| Up to 11,999 | Nil |
| 12,000 – 17,999 | 100 |
| 18,000 – 29,999 | 150 |
| 30,000 – 44,999 | 200 |
| 45,000 and above | 208 |
The rates may be adjusted by your local body, so it is always recommended to check with the respective authority or a compliance consultant.
Filing and Payment Responsibilities: Employer vs Employee
| Responsibility | Employer | Employee |
|---|---|---|
| Register with LSGI | Yes | No |
| Deduct Tax | Yes | No |
| Pay Tax | On behalf of employee and own behalf (if applicable) | Through employer deduction |
| File Return | Yes | No |
| Maintain Records | Yes | No (only receives Form V) |
Due Dates and Penalties
- Returns must be filed either monthly, quarterly, or biannually depending on the instructions from your LSGI.
- Delays in payment or non-filing of returns may result in interest charges and penalties.
- Failure to deduct tax from employees or submit returns can invite inspection and notices from the tax department.
To avoid compliance risks, employers can rely on OurTaxPartner.com for end-to-end support in filing, calculation, and record maintenance.
How OurTaxPartner.com Helps
- Professional Tax registration with municipal authorities
- Employee-wise PT deduction guidance
- Timely preparation and filing of PT returns
- Compliance updates based on latest Kerala notifications
- End-to-end support for salaried employers and self-employed professionals
For businesses and freelancers alike, outsourcing your professional tax filing helps ensure compliance and saves time.
Conclusion
Professional Tax is a legal obligation in Kerala for both employers and employees, as well as self-employed individuals. While the employee’s role is limited to deduction from salary, employers bear the major responsibility for registration, deduction, payment, and filing. Understanding the distinction in liabilities is essential to avoid fines and ensure hassle-free compliance.
If you’re an employer or a self-employed individual looking for professional help, don’t wait for the next deadline to knock. Get expert assistance at www.ourtaxpartner.com/filing-service/professional-tax-filing/ and stay compliant year-round.
