Professional Tax in Karnataka

What is Professional Tax?

Professional Tax is collected by the State Government from individuals working in government, private and non-government organizations (NGOs). The highest amount of professional tax charged in India is Rs. 2,500. A state cannot charge more than Rs. 2,500 as professional tax per year. Professional tax is determined by the income level of an individual and subject to a minimum income level. Professional tax slab rates differ from states to states. In India, professional tax is levied as per the Article 276, Clause 2 of the Indian Constitution.

Professional Tax Overview

Professional tax is a tax levied by the various State Governments of India on salaried individuals, working in government or non-government entities, or in practice of any profession, including Chartered Accountants, Doctors, Lawyers etc or carry out some form of business. This form of tax is in practice for a long time and States were conferred the power of leveling the Tax under Clause (2) of Article 276. The rate at which Professional tax is charged is based on the Income Slabs set by the respective State Governments. However the maximum Professional Tax that can be levied by any State till date is Rs 2500/-. The total amount of professional tax paid during the year is allowed as Deduction under the Income Tax Act. The professional tax is a source of revenue for the State Governments which helps the different in implementing schemes for the welfare and development of the region.

Professional Tax is deducted by the employers from the salary of the salaried employees and same is deposited with the State Government. For other individuals, they have to directly pay it to the Government or through the Local Bodies appointed to do so.

Karnataka Professional Tax:

All working and self-employed professionals whose monthly income is above Rs.1000 need to pay professional tax in Karnataka. Professional earning less than Rs.10000 need not pay any professional tax to the Karnataka Government. A maximum amount of Rs.2400 is payable as professional tax in Karnataka. Professional Tax in Karnataka is managed by Karnataka Tax on Profession, Trade, Callings and Employment Act, 1976.

Who pays Professional Tax in Karnataka?

Both salaried and self- employed individuals need to pay professional tax which is collected by the Karnataka State Government. For salaried employees, professional tax is levied by employers whereas non-salaried professionals need to pay it to local authorities appointed for collecting professional tax. Doctors, lawyers, chartered accounts and any other individuals engaged in private professions are liable to pay professional tax in Karnataka. Professional tax in Karnataka is applicable for the following categories:

  • Corporations
  • Hindu undivided family (HUF)
  • Firms
  • Company and other Corporate bodies
  • Society
  • Club or Association

How to pay Professional Tax in Karnataka?

For salaried employees, their employers will deduct professional tax from their salary per month and deposit it to the concerned authority. Self-employed professionals who don’t work with any organization need to pay this tax by contacting locale PT offices established for collecting tax.

Karnataka Professional Tax Slab Rates 2014-2015:

Like all other states such as Maharashtra, Andhra Pradesh, Tamil Nadu etc., the State Government of Karnataka also change its professional tax rates every year. Mentioned below are the professional tax slab rates applicable for the financial year 2014 -2015.

Monthly Gross Salary Amount Payable as Professional Tax per month
Less than Rs.10000 Nil
Rs. 10000 to Rs.14,999 Rs. 150
Rs. 15000 and above Rs. 200

Karnataka Professional Tax Slab Rates 2015-2016:

The professional tax slab rates for Karnataka are revised for the financial year 2015 -2016. Mentioned below are the slab rates applicable for the current financial year.

Monthly Gross Salary Amount Payable as Professional Tax Per Month
Up to Rs 15,000 Nil
Rs 15,001 and or above Rs. 200

Karnataka Professional Tax E-Payment:

Professional tax payers in Karnataka can pay their professional tax online by visiting the website called e-PRERANA. The website allows taxpayers to submit tax returns and make tax payments by entering their personal and financial details. Taxpayers can also generate the certificate of tax payment online without contacting the PT offices. The website helps professional tax payers pay tax on monthly, quarterly and annual basis.

Exemption From Professional tax

There are the certain class of people who are not required to pay professional tax in Karnataka. These classes are listed below.

  • Senior Citizens above the age of 60 are not required to pay professional tax
  • All charitable and philanthropic hospitals or nursing homes situated in places below the taluk level in all districts of the State except Bangalore and Bangalore Rural District.
  • Directors of Companies registered in Karnataka and nominated by the financing agencies owned or controlled by the State Government or by other statutory bodies.
  • Foreign technicians employed in the State provided their appointments are approved by the Government of India for the purpose of exemption from payment of income tax for the said period( exemption is for a period of 2 years from the date of their joining duty).
  • Members of the Armed Forces who are governed by the Army Act, the Navy Act and the Air Force Act.
    Salaried or wage earning blind persons.
  • Salaried or wage earning deaf and dumb persons.
  • Holders of permits of single taxi or single three wheeler goods vehicle.
  • Institutes teaching Kannada or English Shorthand or Typewriting.
  • A Physically handicapped person not less than 40% of permanent disability (subject to production of a certificate from the HOD of Government Civil Hospital).
  •  A person having a single child and who has undergone sterilization operation, subject to production of a certificate from the District Surgeon, Government Civil Hospital, for having undergone such operation.
  • Central Para Military Force (CPMF) Personnel.
  • Persons running educational institutions in respect of their branches teaching classes up to twelfth standard or pre-University Education.

Penalties of Professional Tax

  • If an employer does not register itself for the professional tax the penalty would be Rs 1000
  • If any other person does not register for the professional tax. The penalty would be Rs 500.
  • The penalty for non-filing of the professional tax return for an employer is Rs.250.
  • The penalty for non-payment of tax by enrolled person and registered employer with interest at the rate of 1.25% per  month and the penalty not exceeding 50% of the tax amount due.

Registration of Professional Tax in Karnataka

The registration of professional tax is mandatory for an employer who pays more than Rs 5000/month to its employees. The registration should be done within a month.

The registration is mandatory for the professional or any other eligible person as well. The registration should be done withing 30 days of professional tax liability.

Karnataka Professional Tax Late Payment Penalty:

1.25% is charged per month for late payment of professional tax in Karnataka. The maximum penalty charged for late payment is 50% of the total outstanding amount.

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