Understanding Professional Tax: When to Start Collecting and How to Handle Pay Cuts?

Hi,

I am seeking anybody's kind attention in this regard.

Our company is registered under the P.T. Act in the month of November, though we started functioning in September. Do we have to collect tax from September onwards or from the month of November?

In the case of a pay cut (if any employee takes leave exceeding the eligible limit), how is P.T. calculated?

I am eagerly awaiting your prompt reply.

Thanks and Regards,
Divya

Professionals should be paid from the business commencement itself. When it comes to professional tax calculations, it depends on the net salary of the candidate.

Thanks & Regards,
Vani

Dear Divya,

Commencement of business is not the criterion for Profession Tax. The gross earnings of the employee for the half-year will matter for the payment of profession tax. Some states also consider the payment of bonus as earnings of the employee during the half-year.

If you can furnish the profession tax slabs applicable to your location, members will be able to respond better.

M.V. Kannan

Hi,

Thank you for the reply. This is the professional tax slab I received from Cochin Corporation, Kerala state:

Sl. No. Half Yearly Income Half Yearly Tax
1 Rs 12000 to Rs 17999 Rs 120
2 Rs 18000 to Rs 29999 Rs 180
3 Rs 30000 to Rs 44999 Rs 300
4 Rs 45000 to Rs 59999 Rs 450
5 Rs 60000 to Rs 74999 Rs 600
6 Rs 75000 to Rs 99999 Rs 750
7 Rs 100000 to Rs 124999 Rs 1000
8 Rs 124999 and above Rs 1250

Please let me know if you need any further assistance.

You have to pay the PT for all the staff from the month the salary is disbursed. You also have to pay the Professional Tax for Partners/Directors, for which you need to take separate registration from the concerned authority of the state government.

Thanks,
Biju

Hi,

I have recently joined a software company and am responsible for all legal activities. We have been paying professional tax to the government since 2002, but we do not have a PT number, and our PT certificate has been misplaced somewhere.

Could you please help me with how to obtain a duplicate PT certificate from the government and what the process for that is? Your early response would be appreciated.

Thanks,
Manoj
+91 9665414444

Dear Manoj,

While it is commendable that you are ensuring the payment of Professional Tax (P.T.), it is crucial to ascertain the correct account for these payments to prevent any discrepancies. Without proper registration, the remitted amount may end up in a suspense account.

I recommend visiting the Professional Tax Officer in your area promptly to register your company for employee P.T. deductions. This registration process is typically linked to the sales tax department. Please go there to obtain the necessary forms for registration or submit an application directly to The Professional Tax Officer in your area.

I understand that I do not have information regarding your specific area or state. However, please follow the instructions provided above to obtain your registration number effectively.

Regards,
KIRAN KALE

Dear Divya,

Consider the gross earnings of each employee for the period starting from September onwards. Then, remit professional tax according to the applicable slabs.

Please also verify the half-year period relevant to your location. Based on this, you need to remit professional tax at the conclusion of each half-year.

Regarding the recovery from employees, it is suggested that you can collect it in six monthly installments to ensure that employees do not feel the financial burden all at once. Additionally, note that if an employee resigns during a half-year, you should calculate their gross earnings for the period until their departure date and then deduct professional tax from their full and final settlement based on the professional tax slabs. When doing this, consider the professional tax already deducted on a monthly basis as advised by me. If my understanding is accurate, professional tax paid by employees is exempt from tax to the extent that it has been paid by the employee (verify with your finance department).

I trust that this clarifies the matter.

M.V. KANNAN

Dear KVR,

The answer to your question on labour welfare fund contribution lies below. Persons who are employed for 30 days during the preceding 12 months, irrespective of their monthly income, should contribute to the Fund. All establishments should send their contribution of Rs.15— employer's share of Rs.10 and employees' contribution Rs.5 each—per employee for 2007 by Demand Draft in favour of the Secretary, Tamil Nadu Labour Welfare Board, DMS Compound, Teynampet, Chennai 600 006.

Please raise a separate thread as the query relates to a different subject, and members may not be in a position to respond to your query as it is part of a different subject.

Regards,

M.V. KANNAN

Dear Mr. Kannan,

Thank you for the valuable information. I still have a doubt. Our company received registration from ROC on Oct. 18th, but we started working in mid-September. How should we calculate P.T.? Should it be from September or October onwards? On the employer's side, P.T. is paid in September (in Cochin, the employer also has to pay P.T.).

I joined in mid-September and received a part salary for that month. How should that month's salary be considered for tax liability?

Regards,
Divya

If the earnings for the employees do not qualify for the payment of Profession Tax, then you can disregard it. However, if an employee has earned at least Rs. 12,000 for September, they must remit Rs. 120 as Profession Tax in the first slab.

Regards,
M.V. Kannan