Confused About Professional Tax for Our 100 Employees – How Do We Start Paying It?

Hi HR's,

In January 2017, we obtained the Shops and Establishment certificate. We currently have around 100 employees, out of which 22 are skilled, and 88 are unskilled employees. Approximately 50 employees earn more than 10,000 INR per month. However, we have not been paying any professional tax.

Could you please guide me on the procedures for paying professional tax? I would greatly appreciate your assistance in resolving this issue.

Thank you,
Nagarjun R
HR Admin
Papas Trading Private Limited

Please get your company registered for professional tax at the corporation office. Thereafter, you have to deduct professional tax from the salary of employees as per the slab.

Dear Mr. Nagarjun,

Professional tax is as per the respective State Government Act and Rules. Please check the relevant PT Act applicable. Please clarify your statement, "We are not paying professional tax"; professional tax is deducted from employee salaries depending upon the applicable PT slab. There is a procedure for the remittance of PT contribution and the due date.

Hi Mr. [Login to view],

We are not deducting any PT. Nobody has asked me any questions, and nobody has come for an inspection.

In case I do not pay PT, what future risks will I have to face?

Employer's Responsibility for Professional Tax Deductions

If an employer fails to deduct PT contributions from an employee's salary, the employer is liable to pay the same. "Ignorance of the law cannot be an excuse for a lapse." The employer is responsible for the remittance of omitted PT contributions, along with interest and penalties as provided under the relevant act. It is crucial to update your knowledge and comply with all laws applicable to your establishment.

Future risks are not only for the employer but also for you as you have been appointed as an HR and Admin Executive. It is essential to change your mindset, and the employer should follow the due procedure.

Under the Karnataka Profession Tax Act, the PT amount to be deducted from salary is Rs. 200 if the monthly gross salary is Rs. 15,000 and above. There will be no PT deduction if the monthly gross salary is Rs. 14,999 and below. Employees who are above 60 years or senior citizens are exempted from the payment of PT.

As rightly said by Srinath, if Professional Tax is applicable in your state, then it is mandatory to abide by the statutory norms. You have to deduct/pay from the Shops & Establishment Certificate date. In a few states like Gujarat, the Shops & Establishment Certificate is issued only on the presentation of Professional Tax Registration.

With regards to not deducted/paid, please consider it now and pay it immediately without waiting for the inspection to happen, so as to avoid a bigger penalty and interest thereon. They may withdraw the Shops & Establishment Certificate too if you do not abide by the rules and regulations of the state.