Employer Withholding Profession Tax: What Can Employees Do About It?

Hi All,

A friend of mine is working for a small-sized IT firm in Pune. They have deducted the profession tax from the employees' salary but not paid the same to the government. Also, they have mentioned the same in the Form-16 despite not having paid it.

What are the consequences of this, and as an employee, what actions can be taken against the employer who does not comply with statutory requirements? Can the employer take disciplinary action against employees who oppose his unethical practices?

Does the law protect employees from such actions by the employer? Can an employee reclaim the undeposited amount from the employer and file a revised IT return?

Please guide us on the same.

Regards, Reena

Dear Reena,

The payment of professional tax is state-specific. No way an employee will be penalized. You made it very clear that the deduction made and such deduction shown in Form 16 create a safe situation. However, the employer is ultimately responsible for paying the tax to the government authority. Non-payment to the government will result in penalties, and the same will be recovered from the employer as revenue recovery. Once deducted, the amount will not be refunded to the employee.

Stay in touch.

Chandrasekaran.V

If an employer has not paid or has paid a very small amount of professional tax, to whom should they report this? What are the penalties for such actions?

Dear Sir,

Can you guide me on the following:

1) If someone joins in the middle of the month, what should be his professional tax deduction?

For example, an employee works for company A until February 14th and is paid Rs 15,000 as half-month salary for February. He joins company B on the 15th of February and is paid Rs 20,000 as half-month salary.

What should be his Professional Tax deduction? His previous employer would deduct Rs 300 as Professional tax, and his new employer would also deduct Rs 300 as Professional tax. This occurs because the salary is not processed until the end of the month.

Can you shed light on how such situations should be handled? There could be various scenarios in this case.

I have considered Maharashtra state for the calculation of Professional Tax.

2) If someone joins the company and has 2-3 years of experience, but there are no deductions related to Professional tax, P.F., or E.S.I. on their salary slip, how should Professional Tax be deducted?

3) The company had not paid the professional tax for the two previous years, even though they had employees and were paying salaries. Even though they did not have professional tax registration, this year they registered the company for professional tax.

Do they need to inform the officials about the previous year's fault? What will be the implications and fines according to Maharashtra State regulations?

Please email me at sunitakby@rediffmail.com urgently.

Thank you,
Sunita

Dear Sunita,

Please find my comments below in blue color:

[QUOTE=Sunita HR;777191]Sir,

Can you guide me?

1) If someone joins in the middle of the month, then what should be his professional tax deduction?

For example, an employee works for company A until February 14 and is paid Rs 15000 as half-month salary for February. He joins company B on the 15th of February and is paid Rs 20000 as half-month salary.

So, what should be his Professional Tax deduction? His earlier employer would deduct Rs 300 as Professional tax. While his next employer would also deduct Rs 300 as Professional tax. This happens because the salary is not processed until the end of the month.

Can you shed light on how such situations should be handled? There would be many variations to this case: If the employee works a full year with employer A from March to February, then only employer A can deduct Rs. 300 from the employee's salary as Professional Tax (As per Maharashtra Rule - 2500/annum). In the case of employer B, as it is the first month of the employee with employer B, he can deduct only Rs. 200 as professional Tax.

I have considered Maharashtra state for the calculation of Professional Tax.

2) If someone joins the company, and the person has 2-3 years of experience, but there is no deduction regarding Professional tax, P.F., ESI in his salary slip, then how to deduct Professional Tax: Professional Tax is deducted from the Gross Salary. So, whatever salary you pay to the employee, the PT would be deducted from the same.

3) The company had not paid the professional tax for the two previous years, even though they had employees and were paying salaries. Furthermore, they do not have professional tax registration. This year, they have registered the company under professional tax.

Do they have to specify to officials about the previous year's fault? What will be its implications and fines according to Maharashtra State: Please consult with the PT inspector/officer, as only they could suggest on the same.

In case of any queries, please call - 9850401160.

Best Regards,

Prashant