Professional Tax Confusion: Does Location or HQ Determine Deductions for Remote Employees?

Hi, I have one query regarding the deduction of Professional Tax. Our company headquarters are in Bangalore, but we have people employed PAN India. My question here is, suppose a person is employed in Bikaner (For Rajasthan PT is 0), will he be eligible for PT deduction as the company is registered in Bangalore, or will the rules be applied as per his working location? Please help me out with this. If possible, attach supporting documents also.

If the payroll is processing only from one area, then you can pay PT as per the Karnataka State Government regulations.

Considerations for Professional Tax Deduction

You have to consider the nature of the job, role, and permanent work location. If your employees are working in a specific location like Chennai, Hyderabad, Kochi, Delhi, etc., permanently from your branch office in those locations, as per prevailing rules, you are supposed to get registered under the Shops and Establishment Rules of the concerned states. This further clarifies that these individuals are working in Corporation/Municipality areas of the concerned states and not Bangalore. This leads to the payment of Professional Tax (PT) in respective states and not in Karnataka.

However, if your employee is working as a pre-sales officer, onsite engineer, or consultant who travels across cities based on customer requirements, and the permanent work location is Bangalore, then PT is payable in Bangalore only.

The employee will be governed by the prevailing Acts, Rules, and Regulations of his place of work. The location of the company headquarters has no relevance in determining the applicability of Profession Tax.

As rightly said, the Professional Tax is location-specific. It has to be paid based on the slab rate applicable to the working location. It varies between Corporations, Municipality, Town Panchayat, etc. The deducting authorities have to adhere to the different slabs.

Is PT deducted as per the working location of the employee or the HQ of the organization?

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Hi!

PT stands for Professional Tax, which is a state-level tax imposed on the income earned by employees. The deduction of PT is typically based on the location where the employee works rather than the headquarters of the organization. Each state in India has its own PT regulations, and the tax amount may vary based on the salary slab and other factors. Therefore, it is essential for organizations to comply with the PT regulations of the specific state where their employees are working to ensure accurate deduction and payment of PT.

Dear Anamika,

Application of PT will be guided by Employees' Place of Work/Posting. The application of PT has nothing to do with the organization's headquarters or registered office, etc. PT is state-specific legislation, and PT deducted will be remitted to the respective state.

Understanding Professional Tax (PT) Deduction in India

All organizations in India with a PAN face this question. If an employee is a resident or permanently placed in a state, then PT must be deducted according to the state and location. However, there are some states where registration under PT requires a Shops Act Registration Certificate (RC) or a factory license.

In cases where the organization does not have an office in the state, obtaining a Shops Act RC registration is not possible in some states. In such situations, you need to find an organization with a Shops Act RC in that state. Explain the difficulty of obtaining a PT RC and get one to agree to share premises for this purpose. Enter into a lease agreement, and once you legally have an office, you may apply for a Shops Act RC and eventually a PT RC in states where it is needed.