Professional Tax And TDS - Job Portals
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Professional Tax And TDS - Job Portals

jain.shweta.84 Started The Discussion:

hi, i want to know the diference between professional tax and TDS(5.20%).
Is it one and same thing??
If an individual is working as a consultant, he would be paying TDS but does he need to pay professional tax as well??

Moreover if someone is at 16k pm and pay 5.2% tds, how can it be claimed back?? would it be claimed back at the time of filing tax return??

same way if someone is at 2 lacs pm, by paying only TDS would they not be paying less tax as compared to when they work as a permanent employee???

Eagerly looking for yr replies.

kuganparamasivam - Member Since: Nov 2006
Dear Shweta.

Don’t mix the Professional tax and TDS.

About TDS

As per the Income tax act, If any company is Registered under the Companies Act 1956 , if the company is paying Payment of More than Rs.20000/- to the singly party, the party may be Service provider to that company /Rent/ Portal (monster) company have to deduct the TDS amount as per the Act


TDS Deduction rates are given below. If you are making any payment to below mentioned heads you have to deduct TDS . For more details go to http://www.jsatrade.com/tax_taxrates.htm you will find solution on your own.



Type of Payment Rate of Deduction
Tax Surcharge Total
1. Salary to employee As Per Normal Slab Rate
2.Interest other then on Securities 10 0.50 10.50
3.Winning from Lotteries & crosswords Puzzles 40 2.00 42.00
4.Winnings from Horse Races 40 2.00 42.00
5.Insurance commission 10 0.50 10.50
6. Rent paid to an Individual or HUF 15 0.75 15.75
7.Rent to other then person mentioned in 6. above 20 1.00 21.00
8.Payment in respect of National Saving
Scheme (NSS ), 1987 20 1.00 21.00
9.Payment on account of repurchase of units
of by UTI or Mutual Funds 20 1.00 21.00
10.Commission on Sale of Lottery Tickets 10 0.50 10.50
11. Payment To Contractor ( In case of
Advertising Contractor) 1 0.05 1.05
12. Payment to Contractor
( Other then Advertising Contractor) 2 0.10 2.10
13.Payment to Sub-Contractor 1 0.05 1.05
14.Fess for professional or Technical Services 5 0.25 5.25
15. Payment of compensation or any
such payment on account of compulsory
acquisition of capital asset where payment
is exceeding Rs.1Lakh 10 0.50 10.50
16.Any other Income 20 1.00 21.00
17. Payment for Commission & Brokerage 5 0.25 5.25

Professional tax.

Professional tax is payable to the state government and the calculation is vary from the state to state. Professional tax is deducted from the salary of the employees of the govt/private.

If you are belong to Tamil Nadu kindly visit http://www.tn.gov.in/dtp/professional-tax.htm & http://www.chennaicorporation.com/pr...x/tax_calc.asp

Upto 21000 nil
21001 – 30000 75
30001 – 45000 188
45001 – 60000 390
60001 – 75000 585
Above 75000 810


Professional tax or employment tax, levied by a State Government is eligible as a deduction. The amount so paid can be deducted from the taxable salary.

Regards
Kugan Paramasivam.
09840485689

kuganparamasivam - Member Since: Nov 2006
Dear Shweta.

Don’t mix the Professional tax and TDS.

About TDS

As per the Income tax act, If any company is Registered under the Companies Act 1956 , if the company is paying Payment of More than Rs.20000/- to the singly party, the party may be Service provider to that company /Rent/ Portal (monster) company have to deduct the TDS amount as per the Act


TDS Deduction rates are given below. If you are making any payment to below mentioned heads you have to deduct TDS . For more details go to http://www.jsatrade.com/tax_taxrates.htm you will find solution on your own.



Type of Payment Rate of Deduction
Tax Surcharge Total
1. Salary to employee As Per Normal Slab Rate
2.Interest other then on Securities 10 0.50 10.50
3.Winning from Lotteries & crosswords Puzzles 40 2.00 42.00
4.Winnings from Horse Races 40 2.00 42.00
5.Insurance commission 10 0.50 10.50
6. Rent paid to an Individual or HUF 15 0.75 15.75
7.Rent to other then person mentioned in 6. above 20 1.00 21.00
8.Payment in respect of National Saving
Scheme (NSS ), 1987 20 1.00 21.00
9.Payment on account of repurchase of units
of by UTI or Mutual Funds 20 1.00 21.00
10.Commission on Sale of Lottery Tickets 10 0.50 10.50
11. Payment To Contractor ( In case of
Advertising Contractor) 1 0.05 1.05
12. Payment to Contractor
( Other then Advertising Contractor) 2 0.10 2.10
13.Payment to Sub-Contractor 1 0.05 1.05
14.Fess for professional or Technical Services 5 0.25 5.25
15. Payment of compensation or any
such payment on account of compulsory
acquisition of capital asset where payment
is exceeding Rs.1Lakh 10 0.50 10.50
16.Any other Income 20 1.00 21.00
17. Payment for Commission & Brokerage 5 0.25 5.25

Professional tax.

Professional tax is payable to the state government and the calculation is vary from the state to state. Professional tax is deducted from the salary of the employees of the govt/private.

If you are belong to Tamil Nadu kindly visit http://www.tn.gov.in/dtp/professional-tax.htm & http://www.chennaicorporation.com/pr...x/tax_calc.asp

Upto 21000 nil
21001 – 30000 75
30001 – 45000 188
45001 – 60000 390
60001 – 75000 585
Above 75000 810


Professional tax or employment tax, levied by a State Government is eligible as a deduction. The amount so paid can be deducted from the taxable salary.

Regards
Kugan Paramasivam.
09840485689

jain.shweta.84 - Member Since: Dec 2006
thanx a lot for yr explanation kugan. however i still hv couple of doubts.

hope you wudnt mind answering it ;)

you have mentioned tat if the company is paying Payment of More than Rs.20000/- to the singly party, the party may be Service provider to that company /Rent/ Portal (monster) company have to deduct the TDS amount as per the Act .
What abt party earning less than 20k?
Does it include consultants as well??? if someone is working as a retainer in less than 20k...are they supposed to pay TDS??


Who all r entitled to pay professional tax?? n any amount above 75000 would remain 810??? be it 1 lac or 2 lac??


Im sorry for bombarding you with questions but im very new to all this infact im a fresher. hv recently completed mba in hr and hv jined a company which has recently strted of. they dont hv hr dept and im the only one...thats how i hv landed up in deep waters.

thanks for yr help n time.

kuganparamasivam - Member Since: Nov 2006
you have mentioned tat if the company is paying Payment of More than Rs.20000/- to the singly party, the party may be Service provider to that company /Rent/ Portal (monster) company have to deduct the TDS amount as per the Act .

What abt party earning less than 20k?

Does it include consultants as well??? if someone is working as a retainer in less than 20k...for them we have deduct TDS ? (are they supposed to pay TDS??)

Answer : TDS you have to Deduct from the Source of Income( Payable to Service provider. by the company)

If it is Less than 20 k . No need to deduct TDS.

Who all r entitled to pay professional tax?? : (21001 *2) 42000 PA

n any amount above 75000 would remain 810??? be it 1 lac or 2 lac?? yes ( check for your State)

you want more details write me @

Regards
Kugan Paramasivam
09840485689

devjit28 - Member Since: Aug 2006
Hi Shweta,

I'm replying only about the TDS part of your query. I'm not aware about Professional Tax.

There are mainly 4 kinds of services which a company uses regularly -contractors, professionals, rent, and sometimes advertising. The TDS criteria for each of these is as follows :

1. Contractors -means any contract for supply of labour for works contract. Here 'works' includes catering, advertising, broadcasting, transporter services either for goods or people. The max amount where TDS is not required to be deducted is a SINGLE payment of upto 20,000, or TOTAL ANNUAL payment of upto 50,000 payable to the receipient.

Which means if in a year you are paying somebody 4 times (lets say) under any contract whose value is more than 50,000 in a year, the normal practice is to deduct TDS on all the instalments even if the value of each instalment is less than 20,000. This is because you already know you have to pay more than the exempted amount by the end of the year. But, if you do not have a contract, and the same contractor does individual jobs for you 4 times in a year, then so long as the individual payments do not exceed 20,000, you dont have to deduct TDS. However, as soon as the sum total of the payments exceeds 50,000 in 1 year, you have to deduct the total TDS from the total payments made so far from the next individual payment. The base TDS rate is 2%.

2. Advertising -this is clubbed under contractors. The exempted amounts and treatment and TDS rate is the same as above. However, if the client is releasing the payment directly to the media, not thru any advertising agency, then the base rate is 1%.

3. Professional Service -this I think would be the largest category for you. This would include placement consultants, job portals, retainers etc. Exempt limit is aggregate 20,000 annually. Base rate is 5%.

4. Rent -Exempt limit is 1,20,000 annually. Advance rent & non-refundable deposits are also subject to TDS. If the property is co-owned by 2 or more owners, then the exempt limit will apply to each of the co-owners separately. The base rate if the recipient is individual is 15%, all other cases it is 20%. Also, if there are two lease contracts, 1 for the propoerty & 2nd for the furniture & fixtures in that same property owned by the same landlord, then the total of the lease amounts under both the contracts are to be considered while calculating the TDS.

Please note that the final TDS rate will also include surcharge and cess. This depends on the amount paid & the kind of recipient -individual, co-operative society or corporate entity. Kugan Paramasivam has already given the rates briefly.

Hope this is actually useful, and doesnt confuse you even more.... :D

Regards,
Devjit

jain.shweta.84 - Member Since: Dec 2006
thanx a lot devjit!! this is what i was looking for as far as TDS is concerned...its very helpful.

nirajain - Member Since: Mar 2008
When Professional tax is applicable to company?

If a company working with 15 employees it is necessary to pay professional tax.

Is their any clause mentioning the minimum no.of employees for which company is not liable to pay professional tax


warm regards
Nira.

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