Karnataka Professional Tax

Professional Tax is a tax levied on professions and trades in India. It is a state-level tax and must be compulsorily paid by every staff member employed in private companies. The business owner is responsible for deducting professional Tax from his employees' salaries and can then pay the amount so collected to the appropriate government department. In this article, we look at Karnataka Professional Tax with an emphasis on the process for registration, professional tax rates, and professional tax return filing.

Law Governing the Karnataka Professional Tax

Professional Tax in the State of Karnataka is administered by the “Karnataka Tax and Profession, Trade, Callings, and Employment Act, 1976.” The Act stipulates that individuals whose monthly income is above Rs. 15,000 are obligated to remit this Tax. The provision doesn’t apply to professionals aged 65 and above and those who have held their respective professions for less than 120 days in a given year.

Karnataka Professional Tax Slab Rates

As the professional Tax levied by each state differs, the maximum amount that Karnataka state can charge is Rs. 2400.00 as a professional tax. Moreover, the state may change the tax rates every year.

Monthly Salary (Gross)	Amount to be Paid as Professional Tax Per Month
Up to Rs 15,000	Nil
Rs 15,001 and or above	Rs. 200

Applicability of Karnataka Professional Tax

The professional Tax must be remitted by individuals and business entities engaged in any profession, trade, callings, or employment — government and private.

It is mandatory for both salaried and self-employed individuals to pay professional Tax, which is collected by the Karnataka State Government.
For salaried employees, the professional Tax is levied by employers, whereas non-salaried professionals need to pay it to local authorities appointed for collecting the Professional Tax.
Doctors, advocates, chartered accountants and every other individual engaged in private professions is liable to pay professional Tax in Karnataka.

Professional Tax in Karnataka is applicable to the following categories: The professional Tax for a salaried individual will be deducted by the employer from the salary. Business entities such as:

Sole proprietor
Partnership firms
Limited Liability Partnership
Corporations
Hindu undivided family (HUF)
Firms
Company and other corporate bodies
Society
Club or Association

Note: Separate PT registration process on the PT website of the Commercial Taxes Department is not required for companies registering under the Spice+ application process from 8th October 2020.

How to Pay Professional Tax in Karnataka?

For salaried individuals: For salaried individuals who receive their salary every month, the employers will deduct professional Tax, as per the slabs, from the salary. This is deposited to the concerned authority in the state on behalf of the salaried individual.
For Self-employed individuals: self-employed individuals and professionals who are not working on a salary basis i.e. those who are not working with any organization and working independently need to pay professional Tax, which can be done by contacting tax offices established in the state to collect the professional Tax.
For organizations: For organizations, the employers need to register as per the state government of Karnataka’s professional tax regulations.

Kinds of PT Registration

Here are the two kinds of registration:

Professional Tax (PT) employer registration
Professional Tax (PT) employee registration

Professional Tax Employer Registration

Employer registration is meant for all businesses and organizations. This registration is regardless of the employees working in the organization. The Certificate of Enrollment, as issued by the Profession Tax Office, is the certificate of registration. This certificate includes the details of the Tax payable by the employer and the payment date Failure to remit the professional Tax within the due date may lead to a penalty. The tax rates are determined based on the number of employees employed. Herewith, are the tax rates for employers as established under the Karnataka Shops and Commercial Establishments Act, 1961:

No employees – No tax implications.
In between 1-5 employees – INR 1000.
In between 5-10 employees – INR 1,500.
More than 10 employees – INR 2,500.
Professional Tax Employee Registration

Professional Tax for the employee is deducted by the employer. The Certificate of Registration is obtained by the employers.

Monthly returns

The employers must remit taxes as per the professional tax slab on behalf of the employees. For employees with a gross monthly salary of Rs. 15,000 or above, the professional Tax is Rs. 200 per month. This must be paid by the employers on their behalf of them.

Due Date for Filing Return

The filing of returns must be done within twenty days from the month for which the Tax is deducted from the employee’s monthly salary during the previous month. Failure to do so may lead to a penalty of Rs. 250 for every month.

Annual returns

All employers and businesses with Enrollment Certificates must remit their taxes before the 30th of April every year as per the stipulated tax slab. Moreover, employers with the Enrollment Certificate are required to file annual returns within 60 days of the end of the fiscal year. The returns must incorporate all the details of the salaries remitted to each of their employees and the professional Tax deducted.

Karnataka Professional Tax E-Payment:

It is simple and can be done online. The state government of Karnataka has facilitated the option of paying Tax and filing the returns through a website, e-PRERANA. This website facilitates Professional Tax Payers to enter and submit returns and make the payment electronically. Professional Taxpayers can generate the Certificate online without visiting the PT offices. This site also facilitates the registered employers to submit monthly/quarterly/annual returns and make the payment electronically.

Procedure to Pay Karnataka Professional Tax

The procedure to pay Karnataka Professional Tax is explained in detail below:

Karnataka Professional Tax Enrolment

Access the e-Prerna Portal, on the left sidebar, under the e-services section; please click on the ‘Enrolment Application’ option.
In case you are enrolling for the first time, select ‘New’ in the category of enrolment. Furnish the required financial year for which you want to file your professional Tax.
Select your professional tax office on the basis of the pin code of your place of work from the drop-down menu.
If you have already enrolled before then select ‘Enrolled’ in the category of enrolment and fill in the required details including the EC (Enrolment Certificate) no. EC number is a 9-digit alphanumeric number allotted to an individual when he/she gets enrolled for the first time. You also get the option to revise the professional tax payment returns filed in earlier years.
Select the business status as applicable.
Select the appropriate class of person to which you belong from the drop-down menu. After selecting the class, please select the appropriate sub-class. Click on ‘Next’
After clicking on next, you need to enter further details which include personal details like name, father’s name, date of birth, address, etc. as well as firm details in which you are working or your own.
If you are having a partnership firm then the relevant details of the partners need to be entered.
After entering all these details, click on ‘Next’. A screen of additional places will be displayed. Only if you are running your business at multiple places (branches), do the required details need to be entered. Click again on ‘Next’
Now, you need to enter your tax detail as applicable. You can find the applicable tax rate to you in the PT Schedule. After entering the tax details, click on ‘Next’.

Payment of Tax

Please select the mode of payment. If you want to pay online, then select the ‘e-Payment’ option, else you can select the ‘Cheque/DD/Cash/Challan’ option. After selecting the mode of payment, click on ‘Submit’ A unique number called the ‘PTN No’ is generated which you can note down for further reference If you had selected the ‘e-payment’ option, then go to the home page by clicking here. In the left-hand bar, please click on the ‘enrolment payment option under the e-services section Please enter the PTR No. and the PTR date, as required click on ‘Go’ and make the online payment. Congratulations, you have deposited your professional Tax online.

Payment of Professional Tax – Offline Method:

In case a person opts for the offline mode of payment like cheque or dd then you need to enter the details like the cheque number, MICR code, date, and the amount. Now, click on ‘ADD’. The related details will appear at the bottom of the page. Now click on the ‘Submit’ option. A ‘PRN Number’ will be generated Visit the jurisdictional PT office with the unique PRN number and physically submit the cheque/DD/Cash/Challan. The concerned PT Officer shall acknowledge the receipt Immediately after submission of the instrument like Cheque/ DD/Cash/ Challan and the same being acknowledged by the jurisdictional PTO, the person will be enabled to obtain the enrolment certificate and the acknowledgment through the web

Karnataka Professional Tax Late Payment Penalty:

In case there is a delay in payment of professional Tax, the state government of Karnataka will charge 1.25% per month for late payment.
However, the maximum penalty the state will charge is 50% for late payment of the total unpaid professional tax amount. It is therefore advised not to forget to pay professional Tax on time or delay the payment of professional Tax.