Individuals with a gross annual income of less than Rs. 2,50,00 are exempt from tax. As per the Karnataka Professional Tax Slab Rates, all individuals earning a monthly gross income of more than Rs. 15,000 are subject to a professional tax of Rs. 200.
The state government collects professional tax on the gross income from individuals working as government employees or in private and non-government organizations (NGOs).
The levied professional tax is as per Article 276, Clause 2 of the Indian Constitution, and it is applicable when the annual income of an individual is above the minimum income. The rates of professional tax charged differ for all states. However, a state cannot charge professional tax more than Rs. 2,500 in a year. In India, a state can charge the highest amount of professional tax as Rs. 2,500 in a year.
As the professional tax levied by each state differs, the maximum amount that Karnataka state can charge is Rs. 2400.00 as a professional tax. Moreover, the state may change the tax rates every year.
The professional tax slab rates for the financial year 2018 -2019 are:
| Monthly Salary (Gross) | Amount to be Paid as Professional Tax Per Month |
|---|---|
| Up to Rs 15,000 | Nil |
| Rs 15,001 and or above | Rs. 200 |
The professional tax must be remitted by individuals and business entities engaged in any profession, trade, callings or employment — government and private.
It is mandatory for both salaried and self-employed individuals to pay professional tax, which is collected by the Karnataka State Government. For salaried employees, the professional tax is levied by employers, whereas non-salaried professionals need to pay it to local authorities appointed for collecting the professional tax. Doctors, advocates, chartered accounts and every other individual engaged in private professions is liable to pay professional tax in Karnataka.
Professional Tax in Karnataka is applicable to the following categories:
All the salaried employees earning more than Rs. 15,000.00 are to be charged a professional tax in FY18-19. The professional tax for a salaried individual will be deducted by the employer from the salary.
For salaried individuals who receive their salary every month, the employers will deduct professional tax, as per the slabs, from the salary. This is deposited to the concerned authority in the state on behalf of the salaried individual. However, self-employed individuals and professionals who are not working on a salary basis i.e. those who are not working with any organisation and working independently, need to pay professional tax, which can be done by contacting tax offices established in the state to collect the professional tax.
For organisations, the employers need to register as per the state government of Karnataka’s professional tax regulations.
Here are the two kinds of registration:
Employer registration is meant for all businesses and organisation. This registration is regardless of the employees working in the organisation. The Certificate of Enrollment, as issued by the Profession Tax Office, is the certificate of registration. This certificate includes the details of the tax payable by the employer and payment date Failure to remit the professional tax within the due date may lead to a penalty.
The tax rates are determined based on the number of employees employed. Herewith, are the tax rates for employers as established under the Karnataka Shops and Commercial Establishments Act, 1961:
Professional tax for the employee is deducted by the employer. The Certificate of Registration is obtained by the employers.
The employers must remit taxes as per the professional tax slab on behalf of the employees. For employees with gross monthly salary Rs. 15,000 or above, the professional tax is Rs. 200 per month. This must be paid by the employers on behalf of them. The filing of returns must be done within twenty days from the month for which the tax is deducted from the employee’s monthly salary during the previous month. Failure to do so may lead to a penalty of Rs. 250 for every month.
All employers and businesses with Enrollment Certificate must remit their taxes before the 30th of April every year as per the stipulated tax slab. Moreover, employers with the Enrollment Certificate are required to file annual returns within 60 days of the end of the fiscal year.
The returns must incorporate all the details of the salaries remitted to the each of their employees and the professional tax deducted.
It is simple and can be done online. The state government of Karnataka has facilitated the option of paying tax and filing the returns through a website, e-PRERANA. In this online portal, one can opt for various services: filing enrollment application, e-payment of taxes, filing of returns, and so on. Moreover, taxpayers can also generate the certificate online of the same.
In case there is a delay in payment of professional tax, the state government of Karnataka will charge 1.25% per month for late payment. However, the maximum penalty the state will charge is 50% for late payment of the total unpaid professional tax amount. It is therefore advised not to forget paying professional tax on time or delay the payment of professional tax.
Ans: The consequences of default or failure to pay the professional tax are as follows:
Ans: In case you fail to obtain the certificate of enrollment, you will be charged with a penalty of Rs. 1,000, over and above the pending annual tax payments.
In case you fail to obtain the certificate of registration, interest of 1.25% for each month will be charged, which will be over and above a penalty. The penalty charged will be equivalent to the liability until fulfilment of the final obligation.
Ans: Senior Citizens are exempt - there is no professional tax levied on individuals - salaried or self-employed - over the age of 60 years. The same applies to those who are self-employed, who have been self-employed for not more than 120 days in the fiscal year.
Karnataka Professional Tax Exempted Categories: Any individual who is blind, deaf and dumb, handicap, or diagnosed with at least 40% of permanent disability, any foreign technicians designated in the Karnataka state, any combatant of defense force or civilian non-combatant members of the defense forces — as per the Army Act, the Navy Act and the Air Force Act, etc.
