Do Shops in Kerala Need Registration for Professional Tax? Seeking Advice!

Hi,

Please advise me if shops and establishments need to be registered for the registration of Professional Tax in Kerala.

Thanks,
Jessy

There is no such registration exclusively for Profession Tax. When the local authorities (Panchayat/ Municipality/ Corporation) issue notice under section 250 (Chapter 14) of the Kerala Municipalities Act, 1994, calling the head of the organization/employer to furnish details of employees working in the organization for the assessment period (of six months), you have to furnish the details. On receipt of the details, the same will be entered in a Register (Demand Register) maintained for this purpose under section 253(2) of the Act.

Once this is done, the secretary of the municipality shall issue notice to the concerned establishment every May and November of the year to furnish details of salary paid to the individual employees during the respective half-year (section 254(1)). Accordingly, the employer shall furnish the information and remit the profession tax not later than August and February of the year (Section 254(2).

However, under Chapter 22 of the Kerala Municipalities Act, registration is mandatory for running a tutorial college/institution.

Regards,

Madhu.T.K

Dear Madhu,

Many thanks for your quick response. Kindly also let me know the current Professional tax slabs for Cochin.

Hope to hear from you soon.

Regards,
Sachin Puri

Please find the attachment.

Regards,
Madhu T.K.

Hi Madhu,

I have seen your explanation about PTAX; it's nice and clear. I am taking care of Chennai PTax and related procedures. Now I need to take care of the Cochin branch as well. Can you please clarify the queries mentioned below:

1. When is the last date for PTAX payment?
2. Should the payment be made by DD/Cheque, and to whom should it be in favor of?

Thanks,
Ram.R

Profession Tax is always paid in advance. For the first half of April to September, the tax is to be paid on or before August 31. For the second half of October to March, the tax payment date is 28th February.

Regards, Madhu.T.K

Thank you for your message.

We paid the last PTAX on 28th March 2008. If we pay the next six months' taxes (April to September) by the first or second week of October, would there be any penalties? Could you please clarify this for me?

Also, could you provide me with the contact numbers of any tax consultants in Cochin? I would like to reach out to them and share the details of my branch employees so that they can calculate the figures and assist with the payment.

Thank you.

You can apprise your Cochin Branch In Charge to meet the Secretary of the Cochin Corporation for details. No need to contact a consultant for this purpose. Please note that it is a pleasure for the members of citehr to offer such services free of cost, and we will not encourage directing a needy person to a professional consultant in ordinary circumstances.

Usually, after the due date of payment, all payments shall be accepted only with penal charges.

Regards,
Madhu.T.K

Hi,

Could you please send me a soft copy of the statement showing details of the half-yearly income of a Self-Drawing Officer in Kerala to be submitted along with the remittance of Professional Tax?

Regards,
Varghese J

Is the professional tax different for areas falling under the Panchayat and the Corporation in Cochin?

Hi Jessy,

Could you please advise me on whether Shops and Establishments need to be registered for the registration of Professional Tax in Kerala?

Thanks,
Jessy

Jessy,

Professional Tax should be paid every half year, i.e., for October to March, the payment should be made before 30th April, and for April to September, it should be paid before 31st October. There are 8 slabs for Professional Tax payment based on the employee's salary.

For registration, you need to fill out the form sections 245 and 254 of the Kerala Municipalities Act, 1994. I visited the Cochin Corporation office for the registration of my branch's Professional Tax and collected the necessary information to complete the formalities.

Ram.R

Dear Mr. Madhu,

I have read your guidelines on Professional Tax of Kerala. They are very useful. Thanks.

We are into Solar Energy products and have established our business across Kerala. We have branches in Cochin, Kottayam, Trissure, Kodungallore, Muvathupuzha, Chalakudy, etc. I need to know where PT should be paid. Should it be paid in one central location for all branches in Kerala or should it be paid branchwise?

I also noticed that you mentioned PT is always paid in advance. As a new establishment like us (started 6 months back), how can we pay it in advance?

I also seek your guidelines on registering our branches in Kerala under the Shops and Establishments Act. I heard that paying the staff welfare fund is mandatory for registering branches. If so, please provide more information on how much needs to be deducted, to whom and where it should be paid, and when.

I know I have asked for a lot of information, but I would be grateful if you could kindly answer my queries.

Thanks in advance,

Nagaraj
HR Generalist

Dear Nagaraj,

Profession Tax cannot be paid centrally. Since it is a subject of local administration, the PT in respect of branches and employees of the branches should be remitted in the area where the branches are located.

For advance payment, it means payment for the next half-year of operation calculated based on the salary of the employees projected for the next half-year and in a similar way, revenue projected for the next half-year.

For registration under the Kerala Shops and Commercial Establishments Act, you may contact the Assistant Labour Officer of the area and submit form B1 along with the prescribed fees.

If covered by the Kerala Shops and Commercial Establishments Act, a new Labour Welfare Fund meant for employees of Shops and Establishments is in force, with the amount being Rs. 20 as the employees' share and an equal share from the employer.

Regards,

Madhu.T.K

There is no separate registration for profession tax. However, for each unit, a separate ledger is maintained by the local authorities showing the details of tax due and tax paid.

Regards, Madhu.T.K

If an employee is posted as a resident engineer in Cochin, and the company is Delhi-based, do we need to get him registered under the professional tax act of Kerala?

If he is holding an office in Kerala, then he has to pay a professional tax in Kerala only even though his salary is paid from Delhi.

Regards, Madhu.T.K

Hi,

Is there any criteria to levy a penalty for delayed PT payments? Please guide me, as I haven't paid PT since April '08.

Hi all,

We all know that professional tax is levied by virtue of sec 254(2) of the Kerala Municipality Act, 1994. Slab rates are also available, but can anybody help me out as to how the gross earnings for the purpose of professional tax calculation are arrived at? Would HRA be a part of the gross earnings for the purpose of professional tax? I would appreciate it if you could guide me on the relevant clause of the Act, please.

Regards, Rajesh. TV

For the purpose of the calculation of Profession Tax, income received should include all earnings of an employee by way of basic salary, dearness allowance, House Rent Allowance, conveyance allowance, and even the overtime payments received during the half-year. Certainly, if a bonus is received, the amount of bonus received will also qualify for the payment of profession tax.

Regards,
Madhu.T.K

Dear Madhu,

There is an amendment to the KMC Act for Section 254. For August and February, it is now September and March. I am also attaching the file.

Thank you.

Kindly let me know whether it is necessary to obtain a license or certificate under the Shop and Establishment Act before registering for Professional Tax.

Profession Tax is assessed and paid to the local administration, i.e., Gram Panchayat, Municipality, or Corporation. Registration to run an establishment is issued by the competent authorities under the Factories Act (Inspector of Factories and Boilers), Kerala (or any other State) Shops and Commercial Establishments Act (State Labour Department), etc. Obtaining registration to start an establishment is mandatory and is the first step, but it has nothing to do with the assessment of Profession Tax.

Regards,
Madhu.T.K

Dear Madhu,

Thank you very much. It's very useful.

When I approached the Revenue Inspector at the Corporation of Cochin Zonal office, they said that we now need to first submit an application for the revenue assessment of our branch. After assessing the office and other details, the Revenue Inspector will inform us of the amount we have to pay and provide a list of documents to be submitted along with the payment. However, he first asked me, "Have you obtained a license from the health department?"

This has left me confused about the procedures for completing the Professional tax payment. I am familiar with the procedures to obtain a license under the Shop and Establishment Act, but I am unsure about the requirements for a license from the health department.

Could you please clarify this for me? I would be very thankful to you and to this group if you could provide me with a clear idea about this.

Thank you.

Obtaining a license from the health department is one of the formalities connected with setting up an establishment. Only after you comply with it, you can get registration under the Shops and Commercial Establishments Act or the Factories Act, as the case may be. The license is, in fact, the identity of the establishment, which is why the officer has asked about it.

Regards,
Madhu.T.K

Any tax, whether income tax or profession tax, is calculated based on the earnings of the employee. Therefore, if an employee has been paid less than his actual salary due to absence from work without leave or simply loss of pay, the same amount must be added to arrive at his total earnings/salary for tax calculation purposes. Thus, the salary after deduction of loss of pay should be the basis for profession tax calculation. If an employee has been on leave without pay and has worked for fewer than 60 days in the half year, naturally, he is not expected to pay any profession tax.

Regards,
Madhu.T.K

There is no separate PT slab for Cochin. For Kerala, a common slab is available, and that is attached in the thread. Please start from the beginning of the thread and access it.

Regards, Madhu.T.K

I paid my professional tax. Then, after two months or later but less than 6 months, I resigned from my post. What is the procedure? Am I liable? If liable, how much? Please inform me.

I presume you mean your salary was subject to a deduction of Prof. tax for two months, and later on, you resigned. If so, the employer will pay the tax so deducted to the local administration when it becomes payable along with tax due on other employees' salary. If no deduction is made from the monthly salary but the practice is to deduct it once with the sixth-month salary only, then you will be liable to pay it directly to the local administration as per the tax rates applicable. However, in practice, nobody remits it, and the local administration will not trace it.

Regards,
Madhu.T.K

Will you be able to shed some light on how the salary for the months of August and September is calculated if the tax is to be remitted in August (the 5th month)? If the figures taken are of the payable scale without deductions and supposing that the employee is on medical leave or loss of pay for two months, meaning they are not earning anything. Would it be an acceptable practice if six months prior to August is considered for computing profession tax?

Thanks for the reply, Madhu. If anyone in the group can shed some light on how this practice of taking the projected salary for one or two months instead of the paid salary for the previous six months originated, it would be helpful. Does anyone see anything significantly wrong if one considers the actual salary from the previous six months for the computation of professional tax?

I want to register the company under PT registration in Cochin. What is the procedure and rules? Please clarify...

There are no separate revenue slabs for employers; the same that is applicable to employees also applies to employers. Please remember that the figures are not salaries but the income/revenue earned, which implies that profession tax is payable not merely on salary but on all sorts of income. This includes income from fees (doctors, lawyers, and other professionals pay PT on their fees), turnover (traders, industrialists, and commercial establishments pay it based on their turnover), and so on.

Regards,
Madhu.T.K

Is there any employer contribution for professional tax in Kerala to be paid, which amounts to ₹1250 once every six months? If yes, can anyone please send me the link where I can find the law in writing.

Understanding Professional Tax Contributions

That is not the employer's "contribution," but it is the amount that the employer has to pay on the revenue/income that he generates. One should understand that professional tax is a tax on revenue; it need not necessarily be salary but can be any type of revenue, like fees which a doctor or lawyer collects, and so on. When it comes to an employer, it will be the turnover which is considered as the revenue generated. An employer whose revenue during the half-year is less has to pay less tax, and the maximum is Rs. 1250, following the same table as is applicable to others like employees.

Regards,
Madhu.T.K

I read the above thread regarding professional tax and had some queries. I am working as a resident doctor (trainee) in a private hospital in Kochi and receiving a stipend. My employer recently deducted Rs. 1250/- from my stipend as professional tax. When I asked for a receipt, they plainly refused to give one. Should this tax be deducted from my stipend when I am not even eligible for a receipt? Is this tax supposed to be taken from me as well since I am only receiving a stipend? Before this, I was working as a postgraduate in Trivandrum Medical College, and not once was my tax deducted. Moreover, a stipend is not taxable, so should they deduct this professional tax from my stipend?

Your clarification would be of great help.

Thanks.

Understanding Profession Tax on Stipends

Profession tax is not a tax on "salary" but rather on any income received. Therefore, a stipend will attract profession tax. Regarding the receipt, it is not the employer who will issue it but the local administration, i.e., Kochi Corporation, which will issue the receipt. It may also happen that the Corporation may issue one receipt for the entire amount paid by the employer on behalf of employees, and in such cases, individual receipts may not be available.

You can also see in your Income Tax Form 16, issued by the employer, that the amount you have paid towards profession tax, Rs. 2500 (Rs. 1250 for half-year), will be shown as a deduction from the salary income. This will support your stand of having paid the profession tax.

Regards,
Madhu.T.K

Dear Madhu,

I have one doubt. If an employee works, let's say, for 4 months in Kerala, should PT be deducted for 4 months or 6 months?

For example, if Mr. X is earning a salary of 125000 for 4 months, then should PT be Rs. 832/- (for 4 months) or Rs. 1,250/- (for 6 months)?

Can you please clarify the queries mentioned above?

Take into account the actual amount earned by the employee. If his earnings/revenue are Rs. 125,000 for four months, he is liable to pay Rs. 1,250 because he will fall under slab VII, where the income exceeds Rs. 125,000 per half year and the professional tax is Rs. 1,250.

There is no profession tax of Rs. 832.

Madhu.T.K

Dear Madhu,

Our office is near to Cochin International Airport, Nedumbassery. Do we need to deduct Professional Tax (P.Tax) from staff according to the slab and also deduct the company's share, or is only staff deduction required?

Thank you.

Your employees have to pay a professional tax, and your establishment should also pay it based on the turnover you make.