Professional Tax in Karnataka

Overview of Professional Tax in Karnataka

Professional Tax is a tax levied by the state government on individuals earning an income from salary, profession, trade, or business. In Karnataka, it is governed by the Karnataka Tax on Professions, Trades, Callings, and Employments Act, 1976.

Types of Professional Tax Certificates:

There are two types of certificates:

Professional Tax Enrollment (PTEC):

Professional tax enrollment applies to a wide range of entities, including companies, firms, limited liability partnerships, corporations, societies, Hindu undivided families, associations, clubs, as well as professionals such as legal practitioners, contractors, architects, engineers, tax consultants, management professionals, chartered accountants, lawyers, and medical representatives like doctors and professors.

PTEC Tax Slab Rate In Karnataka for 2024-2025

Refer to the table below for the updated professional tax rates applicable to above category in Karnataka.

Professional Tax Registration (PTRC):

Applicable for salaried employees, where the employer deducts the professional tax amount from the salary of the employee and deposits the tax to the state government.

PTRC Tax Slab Rate In Karnataka in 2024-2025

Refer to the table below for the updated professional tax rates applicable to salaried individuals in Karnataka.

Procedure for Professional Tax Registration

Application Submission:

• Visit the official website of the Commercial Taxes Department, Karnataka.
• Submit the application form along with required documents.

Verification & Approval:

• The application and documents are verified by the authorities.
• Once approved, a Certificate of Registration (PTRC or PTEC) is issued.

Payment of Professional Tax:

• Employers need to deduct Professional Tax from employees’ salaries and pay it to the government monthly/annually.
• Self-employed individuals need to pay the tax annually as per the prescribed rates.

 Documents Required for Ptax Registration

• Legal Name of Employer: Permanent Account Number (PAN) is mandatory
• Trade Name; if any;
• Constitution of Profession, Trade, etc.: (a) Sole Proprietor;

(b) Unregistered Partnership Firm;

(c) Registered Partnership Firm;

(d) Private Limited Company;

(e) Public Limited Company;

(f) Public Sector Undertaking;

(g) Government Company;

(h) Statutory Body; Co-operative Society

(j) Trust;

(k) HUF (Hindu Undivided Family);

(l) Manager/Agent of NonResident Dealer;

(m) Casual Trades;

(n) Others.

• Nature of the Profession, Trade, etc.:
• Full postal address and telephone Nos.
• Aadhaar No. of Authorised Signatory
• Mobile No. of Authorised Signatory:
• Photograph of Authorised Signatory:
• Goods and Services Tax No. (GSTIN): KST/CST/Any other Registration or License Number:
• Date of Commencement of Trade, Profession:
• Number of Employees:
• Scanned Documents: (i) Photograph of Proprietor, Partner, Director, Authorised Person: (ii) Constitutions of Business: Registration of Incorporation, Deed of Partnership firm, Registration ertificate etc. as applicable: (iii) Proof of Principal Place of Business:

 Professional Tax Payment Due Date

• PTRC: Monthly payment by the 20th of the following month.
• PTEC: Annual payment by 30th April of each year.

Penalties for Non-Compliance

The Karnataka state government imposes a penalty for delayed payment of professional tax, calculated at a rate of 1.25% per month. The maximum penalty that can be applicable is 50% of the total outstanding amount.

 Frequently Asked Questions

1. Why is professional tax deducted?
   • Professional tax is deducted as a statutory obligation by state governments to generate revenue for welfare programs and ensure legal compliance.
2. Is professional tax compulsory in Karnataka?
   • Yes, professional tax is compulsory in Karnataka for employers, salaried individuals, and professionals as per the Karnataka Tax on Professions, Trades, Callings, and Employments Act, 1976.
3. Can we skip professional tax?
   • No, skipping professional tax is illegal, and non-compliance can result in penalties and legal action.
4. Can professional tax be refunded?
   • No, professional tax cannot be refunded as it is a statutory tax and not eligible for refunds once paid.
5. Is professional tax the same for all employees?
   • No, professional tax varies based on the employee's monthly salary slab as determined by the state government.
6. Who is exempt from professional tax in Karnataka?
   • Professional tax in Karnataka is exempted for members of the Indian Navy, Air Force, and Army serving in any part of Karnataka.
7. How to pay professional tax in Karnataka?
   • Professional tax can be paid online through the official website by providing the government ID, registration number, enrolment number, or application number for new enrolment.
8. Is professional tax part of CTC?
   • Yes, professional tax is part of CTC as it is deducted from the employee’s gross salary by the employer.
9. Is professional tax deductible in the new tax regime?
   • No, Professional Tax deduction is permitted under Section 16 of the Income Tax Act, but it is only allowed under the Old Tax Regime, not the New Tax Regime.
10. Is there any professional tax for partners?
    • Yes, partners of a firm are liable to pay professional tax if they are earning income through their profession or business, as per state laws.