PROFESSION TAX REGISTRATION IN KARNATAKA 

Profession Tax is a tax levied by the State Governments in India under Article 276 of the Constitution of India and is a tax on professions, trades, callings and employments carried on in a State. However, not all States in India impose this tax. The maximum amount of Professional Tax that can be levied is limited to Rs.2500/-. 

In Karnataka, Profession Tax is levied under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 and every person who is liable for payment of the Profession Tax is required to register himself with the Profession Tax Authorities. 

WHO SHOULD REGISTER FOR PROFESSION TAX

Every person who exercises any profession or calling or is engaged in any trade or holds any appointment, public or private or is employed in any manner in the State of Karnataka, as specified in the Schedule to the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976, is liable to pay to the State Government Professional Tax at the rate specified in the Schedule. 

Meaning of “Person” under the Act

Under the Act, the term “Person” is defined as any person who is engaged in any Profession, trade, callings or employment in the State of Karnataka and includes :- 

· Hindu undivided family (HUF) 

· Firm 

· Company 

· Corporations 

· Other Corporate bodies 

· Any Society 

· Any Club or Association. 

Every branch of a firm, company, corporation or other corporate body, any society, club or association is treated as separate person for the purpose of tax liability. 

No tax is payable by individuals who are senior citizens having attained age of 60 years or holding any Profession for less than 120 days in that year. 

CERTIFICATE OF REGISTRATION (EMPLOYEE REGISTRATION)

Registration for Employer liable to deduct Profession Tax from employees (Entry No.1 of Schedule) 

In case of salary or wage earners whose salary or wage for a month is Rs.15,000/- or more, the employer is liable to deduct Profession Tax payable under this Act and pay to the Government on behalf of all such employees within 20 days of expiry of the month. All such employers other than Government are required to obtain a Certificate of Registration from the Profession Tax Officer of the jurisdiction. 

The Current applicable rate (2018-19) of Professional tax for the above category of salary or wage earners is Rs.200/- month. 

Monthly Return 

Every employer registered under this Act is required to furnish a statement in Form 5-A every month showing the salary and wages paid by him to his employees and the amount of tax deducted by him. Such statement is required to be furnished on or before 20th of the succeeding month along with the payment of the full amount according to the statement. 

Annual Return 

Every employer is also required to furnish an annual return in Form 5 within 60 days of the expiry of a year and he shall pay the full amount of tax payable by him on the basis of such return by any tax already paid along with the monthly statement in Form 5-A. 

CERTIFICATE OF ENROLMENT (EMPLOYER REGISTRATION) 

In case of Class of persons enumerated in Sl. No.2 to 74 of the Schedule (like Legal Practitioners, Doctors, Chartered Accountants, Engineers, Professional Consultants, Oil Pump Owners, Chit Funds, Companies, Partners of a firm, Private hospitals and nursing homes, film distributors, Private Educational Institutions, Security Service providers, etc.) who are liable to pay professional tax, they are required to obtain a Certificate of Enrolment from the Profession Tax Officer of the jurisdiction. 

The assessing authority shall mention in every Certificate of Enrolment, the amount of tax payable by the holder according to the Schedule and the date by which it shall be paid. 

Such persons with Enrolment Certificate must pay tax every year before April 30 at the rates specified in the Schedule. Person who is enrolled after the commencement of a year shall pay the professional tax within 1 month from the date of enrolment. 

TIME PERIOD TO OBTAIN REGISTRATION 

Every employer or self-employed person required to obtain registration or enrolment shall within 30 days from the commencement of his profession, trade, calling or employment apply electronically for registration or enrolment, as the case may be, to the concerned Professions Tax Officer. 

EXEMPTION 

The following class of persons are exempted from payment of Profession Tax. 

1. All charitable and philanthropic hospitals or nursing homes situated in places below the taluk level in all districts of the State except Bangalore and Bangalore Rural District. 
2. Directors of Companies registered in Karnataka and nominated by the financing agencies owned or controlled by the State Government or by other statutory bodies. 
3. Foreign technicians employed in the State provided their appointments are approved by the Government of India for the purpose of exemption from payment of income tax for the said period (exemption is for a period of 2 years from the date of their joining duty). 
4. Combatant and civilian non combatant members of the Armed Forces who are governed by the Army Act, the Navy Act and the Air Force Act. 
5. Salaried or wage earning blind persons. 
6. Salaried or wage earning deaf and dumb persons 
7. Holders of permits of single taxi or single three wheeler goods vehicle. 
8. Institutes teaching Kannada or English Shorthand or Typewriting. 
9. A Physically handicapped person not less than 40% of permanent disability (subject to production of certificate from the HOD of Government Civil Hospital). 
10. An ex-serviceman not falling under Sl No.1 of the Schedule. 
11. A person having single child and who has undergone sterilization operation, subject to production of a certificate from the District Surgeon, Government Civil Hospital, for having undergone such operation. 
12. Central Para Military Force (CPMF) Personnel.
13. Persons running educational institutions in respect of their branches teaching classes upto twelfth standard or pre-University Education. 

INTEREST AND PENALTIES UNDER PROFESSION TAX ACT, 1976 

1) Penalty for non-registration in case of employer – Rs.1,000/- 

    In case of other persons Rs.500/-. 

2) Penalty for non-filing of Returns for an employer Rs.250/-. 

3) Penalty for non-payment of tax by enrolled person and registered employer with interest at rate of 1.25% per month and Penalty not exceeding 50% of the tax amount due. 

Disclaimer: This blog is made available only for educational purpose as well as to give you general information and a general understanding of the law, not to provide specific professional advice. The blog should not be used as a substitute for professional advice. Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals. The use or reliance of any information contained in this blog is solely at your own risk.