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Professional Tax Consultants in Chennai

Professional Tax

Tax on Profession, trade, calling and employment

Professional tax is tax which is levied by the state on the income earned by way of professional trade, calling or employment .

The form of tax was first levied in India in the year 1949 and the power to levy professional tax has been given to the states by way of clause (2)of article 276 of the constitution of India

professional tax

This act is levied based on slab rates depending on the income of the individual. This Tax is just like income tax except for the fact that income tax is collected by the central Govt. and professional tax is collected by the state government. When this tax was first introduced in India, the maximum limit on the tax to be collected was 250. However, this limit was raised from 250 to 2500 in the year 1988.

For the past few years state Governments have been requesting the parliament to raise this ceiling from 2500 to 7500.However, their request has not been accepted and the maximum amount of professional Tax that can be levied by any state in 2500 only.

Any amount paid as professional Tax to the state govt. is allowed as a deducation under section 16 of the income tax Act and income Tax on the Balance amount is levied as per the income tax slab rates in force

"Employee" means a person employed on salary and includes,

A Government servant receiving pay from the revenue of the Central Government or any State Government;

A person in the service of a body whether incorporated or not, which is owned or controlled by the Central Government or any State Government, where, such body operates within the municipal limit even though its headquarters may be outside the municipal limit; and

A person engaged in any employment by an employer not covered by sub-clauses (i) and (ii);

"Employer" in relation to an employee earning any salary on a regular basis under his means, the person or the officer who is responsible for disbursement of such salary and includes the head of the office or any establishment as well as the Manager or Agent of the employer;

"half-year" shall be from the 1st day of April to the 30th day of September and from the 1st day of October to the 31st day of March of a year;

"month" means a calendar month;

"person" means any person who is engaged actively or otherwise in any profession, trade, calling or employment in the State of

Tamil Nadu and includes a Hindu undivided family, firm, company, corporation or other corporate body, any society, club, body of persons or association, so engaged, but does not include any person employed on a casual basis;

"Tax" means the tax on profession, trade, calling and employment levied under this Chapter.

Levy of Profession tax :

There shall be levied by the Municipal Council a tax on profession, trade calling and employment.

Every company which transacts business and every person, who is engaged actively or otherwise in any profession, trade, calling or employment with in the Town Panchayat on the first day of the half-year for which return is filed, shall pay half-yearly tax at the rates specified in the Table below in such manner as may be prescribed:

Sl. No.

Six months income (Rs.)

Old Tax (Rs)

New Tax (Rs)

1

upto 21,000

-

-

2

21,001 – 30,000

75

100

3

30,001 – 45,000

188

235

4

45,001 – 60,000

390

510

5

60,001 – 75,000

585

760

6

75,001 and above

810

1095

Profession Tax Collectable from the salary of August (Ist Quarter ) and January (IInd Quarter)

The rate of tax payable under sub-section (2) shall be published by the executive authority in such manner as may be prescribed.

Where a company or person proves that it or he has paid the sum due to account of the tax levied under this chapter or any tax of the nature of a profession tax imposed under the Cantonments Act, 1924 for the same half-year to any local authority or cantonment authority in the State of Tamil Nadu such company or person shall not be liable by reason merely of change of place of business, exercise of profession, trade, calling or employment or residence, to pay the tax to any other local authority or cantonment authority. (Central Act II of 1924).

The tax livable from a firm, association or Hindu undivided family may be levied on any adult member of the firm, association or family.

Where a person doing the same business in the same name in one or more places within the Town Panchayat, the income of such business in all places within the Town Panchayat shall be computed for the purpose of levy of tax and such person shall pay the tax in accordance with the provisions of this Chapter.

Where any company, corporate body, society, firm, body of persons or association, pays the tax under this chapter, any director, partner or member as the case may be, of such company, corporate body, society , firm, body of persons or association shall not be liable to pay tax under this Chapter for the income derived by such director partner or member form such company, corporate body, society, firm, body of persons or associations.

Every person who is liable to pay tax, other than a person earning a salary or wage shall furnish to the executive authority a return in such form, for such period and within such date and in such manner as may be prescribed . Provided that subject to the provisions of sub-sections (10) and (11), such person may make a self-assessment on the basis of average half-yearly income of the previous financial year and the return filed by him shall be accepted without calling for the accounts and without any inspection.

Every such return shall accompany with the proof of payment of the full amount of tax due according to the return and a return without such proof of payment shall not be deemed to have been duly filed.

Notwithstanding anything contained in the proviso to sub-section (8), the executive authority may select the percent of the total number of such assessment in such manner as may be prescribed for the purpose of detailed scrutiny regarding the correctness of the return submitted by a person in this connection and in such cases final assessment order shall be passed in accordance with provisions of this Chapter.

If no return is submitted by any person under sub-section (8) within the prescribed period or if the return submitted by him appears to the executive authority to be incomplete or incorrect, the executive authority shall, after making such enquiry as be may consider necessary assess such person to the best of his judgement:

Provided that before taking action under this sub-section,

The person shall be given a reasonable opportunity of proving the correctness or completeness of any return submitted by him.

12) Every person who is liable to pay tax under this section, other than a person earning salary or wage:-

(a) Shall be issued with a pass book containing such details relating to such payment of tax as may be prescribed and if the pass book is lost or accidentally destroyed the executive authority may, on an application made by the person accompanied by such fee as may be fixed by the municipal council, issue to such person a duplicate of the pass book.

(b)Shall be allotted a permanent account number and such person shall -

(i)Quote such number in all his returns to, or correspondence with the executive authority;

(ii) quote such number in all chalans for the payment of any sum due under this chapter.

The rate of tax specified under sub-section (2) shall be revised by the municipal council once in every five years and such revision of tax shall be increased not less than twenty-five percent and not more than thirty-five percent of the tax levied immediately before the date of revision.

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