Professional Tax Dilemma: Do Employees Working in Karnataka Owe Tax if Hired from Delhi?

Hi, if a contractor whose office is situated in Delhi sends his employee to work in Karnataka, will the employee be liable to pay professional tax if they work for a full year in a company in Karnataka? If so, is it obligatory for the employer in Delhi to deduct the professional tax from the employee's salary and pay it to the Karnataka Government authorities?

Hi Krish, Hope you have found an answer to your question by now.  Actually, I am facing a similar situation. Can you please help me with this? I would like to know whether our company, which is based out of Delhi, will be required to register under the Professional Tax Act in Karnataka even if we do not have any office or branch there, and there are only two employees who would be working from home in Bangalore.

Regards, Nidhi

If the period of employment is more than 120 days in a year, as per the rates prescribed in the schedule, sec 3(2), compulsory registration/enrollment under the Act is required under sec 5 within 30 days of becoming liable to pay tax.

I hope this will help. In case you need a copy of the Act, let me know.

Regards,
Krish

The act is applicable when employment is in the state of Karnataka. In your case, if the appointment formality is done in Delhi, then you are not covered as an employer because employment is in Delhi, and the person working there is just fulfilling their contractual duties. You will be covered only when you have an office in Karnataka. For example, a person employed by X company outsourced to B company is employed by X, not by B. Too much interpretation is involved; please check the meaning of employed in Karnataka.

Regards,
Krish

If you go by the explanation inserted in the definition of a person, it also gives the idea that a branch or office should be situated in Karnataka.

Please help me. X Company's office is located in Mumbai, and some employees work in Delhi. Please advise on which state's taxes apply to employees working in Delhi.