Profession Tax Act, 1975 Maharashtra

This act is also called as The Maharashtra State Tax on Professions, Trade, Callings and Employments Act, 1975.

Profession Tax means the tax on Professions, Trades, Callings and Employments levied under this Act. This act may be called the Maharashtra Tax Laws (Levy & Amendment) ACT, 2010. It extends to the whole of the State of Maharashtra. It shall be deemed to have come force on the 1^st day of April, 1975.

Profession Tax is a Tax may be imposed on Professions and Employments even though the employee is already paying an income tax. As per Constitution of India Article 276 the total amount payable in respect of any person to the state or to any one municipality, district board, local board, or other local authority in the state by way of taxes on Professions, Trades, Callings and Employments shall not exceed Rs. 2500 p.a.

It is a tax on Professions, Trades, Callings and Employments for raising the resources needed for implementing the Employment Guarantee Scheme of the Maharashtra State Govt. and to provide for establishment of the Employment Guarantee Fund.

The following is the Procedure for Registration and Enrolment as per the act.

Registration – Section 5 of the Act, 1975 states that -

Every employer not being an officer of govt. liable to pay tax under Sec 4 or 10 A(5) (Special Provisions regarding liability to pay tax in certain cases) shall obtain a certificate of Registration from the prescribed authority in the prescribed manner.

As per Sec 2 employers means the person or the officer who is responsible for paying salary or wages of the employee. It includes the head of the office of any establishment and that of the employer. As per section 2  person means it covers anybody who is engaged actively of otherwise in any profession , trade, callings or employment in the State of Maharashtra. It includes a HUF, Firm, Company, Corporation or other corporate body, any society, club or association. In other words it includes individuals and all types of organizations. It specifically excludes any person who earns wages on a casual basis.

Form I has to be used for applying for Registration then the authority will issue Certificate of Registration in Form IA.

If an employer has more than one place of work then in that case he shall make an application for Registration separately to each authority in respect of his place of work within the jurisdiction of that authority.

A company which employs persons should get certificate of registration. It is liable to pay profession tax as it is engaged in trade and it shall also get certificate of enrolment.

Every employer is required to obtain a certificate of Registration within Thirty days of his becoming liable to pay tax.

Enrolment – Section 5 of the Act, 1975 states that -

Every person liable to pay tax under this act, other than a person earning salary of wages in respect of the tax is payable by his employer, shall obtain certificate of enrolment from the prescribed authority in the prescribed manner.

If an Indian Citizen is in employment of any diplomatic office, consular office or trade commissioner of any foreign country situated in any part of the state, he shall obtain a certificate of enrolment provided he is liable to pay tax and pay the tax himself. In other words these offices need not get deduct tax from the Salary of their employees and they need not get certificate of registration. In case of foreign citizens employed in these offices are not liable to pay profession tax.

Form II has to be used for applying for certificate of enrolment or revision of certificate of enrolment. The certificate of enrolment will be issued in Form IIA.

If a person, who has to apply for certificate of enrolment, has more than one place of work within State of Maharashtra, he shall make a single application only in respect of all places of work. He has to name one place of work as principal place work and submit the application to the authority in whose jurisdiction the principal place of work is situated.

This certificate shall also serve as a notice of demand for the purpose of section 10 (penalty for nonpayment of tax).

Every person required to obtain a certificate of enrolment shall, in respect of a person referred in subsection 2 or 2A within Thirty days of his becoming liable to pay tax at a rate higher or lower than the one mentioned in his certificate of enrolment apply for certificate of enrolment or a revised certificate of enrolment. The prescribed authority shall after making such inquiry as may be necessary within Thirty days of the receipt of the application , if the application is in order, grant him such certificate.

Amount of Profession Tax:

Amount of Profession tax is to be determined according to New Schedule – I Schedule of Rates of Tax on Professions, Trades, Callings and Employments.

As per section 3 – Levy and charge of Tax:

1.     Subject to the provision of Article 276 of the Constitution of India and of this act, there shall be collected a tax on professions, trades, callings and employments for the benefit of the state.

2.     Every person excluding firms (whether registered under the Indian Partnership Act, 1932 or not) and HUF engaged actively or otherwise in any profession , trade, callings and employments and falling under one or the other of the classes mentioned in the second column of schedule I shall be liable to pay to the State Govt. the tax at the rate mentioned against the class of such persons in the Third column of the said schedule provided that the tax so payable in respect of any one person shall not exceed Two Thousand and Five Hundred Rupees in any year.

Provided further that, entry [21] in schedule I shall apply only to such classes of persons as may be specified by the State Govt. by notification in the official Gazette, from time to time.

Entry [21] in schedule I is a residuary entry if a person has to be covered under this entry, the State Govt. by notification in the official Gazette specify the class of person as liable to professional tax and the person should belong to that class of persons.

As per Section 8 the payment of Profession Tax is as follows:

The tax payable under this Act shall be paid in the prescribed manner. The amount of tax due from enrolled persons for each year as specified in their enrolment certificates shall be paid in accordance with the following table as per section 8 of the Act, 1975.

PAYMENT OF TAX BY THE ENROLMENT CERTIFICATE HOLDER

Lump Sum Payment for Five years:

If the person holding certificate of enrolment, who is liable to professional tax at rate of Rs. 1700, 2200 or 2500, wants to pay lump sum amount for five years, he can pay it. He can discharge his liability for payment of tax by making payment in advance of a lump sum amount to four times of the tax applicable to him . He has to make payment on or before the 30^th June of the year.

If the lump sum payment is not made before 30^th June but made before the end of the year, then he is liable to pay an additional amount for the delay at the rate of Rs. 200 per month.

In this case any increase or decrease after the person pays the lump sum amounts shall not vary the liability of tax payable by him. In other words, if he has paid the lump sum amounts, then he need not pay anything even if there is increase in the professional tax rate applicable to him. Likewise, he is not entitled to any refund if there is any reduction in the professional tax rate applicable to him.

Returns:

As per Sec 6 –

1)    Every employer registered under this act shall furnish to the prescribed authority (a return in such form, for  such period and by such dates as may be prescribed) showing there in the salaries & wages paid by him and the amount of tax deducted by him in respect thereof. Provided that, the commissioner may , subject to such terms and conditions, if any as may be prescribed , permit any employer to furnish a consolidated return relating to all or any of the places of business of such employer in the state, for such period or periods, to such authority, as may direct.

2)    Every such return shall be accompanied by a treasury challan in proof of payment of full amount of tax due according to the returns and a return without such proof of payment shall not be deemed to have been duly filed.

3)    Where an employer has without reasonable cause failed to file such return within the required time, the prescribed authority may, after giving him an opportunity of being heard, impose upon him a penalty of RS. 300 per return.

Provided that, the commissioner may, subject to such return terms and conditions, as may be prescribed, permit any employer to file separate returns-

a)     For all or any of the places of business of the employer, whether or not situated within the jurisdiction of the same registering authority or

b)    For different constituents of his business.

TIME LIMIT FOR FILING RETURN

Return in the First Year:

In the first year in which the employer is granted registration certificate, the employer has to file quarterly return. The first return to be furnished by the employer shall be for the period commencing on the day on which he so becomes liable to be registered and ending on the last day of the quarter in which he is granted the certificate of registration.

Last Return:

Where the certificate of registration is cancelled, the last return to be submitted shall be for the period commencing on the first day of the year, the quarter, or the month, in which the certificate is cancelled and ending on the day on which the employer has ceased to be an employer.

Filing of Separate Returns:

The amendment has made provision for filing separate returns for different places of business. The authority may permit any employer to file separate returns, for all or any of the places of business of the employer, whether or not situated within the jurisdiction of the same registered authority. Likewise he may permit any employer to file separate returns, for different constituents of his business. He may direct that the returns are to be filed authority specified by him and he may allow this subject to such terms & conditions as prescribed.

PENALTY:

As per section 5 Registration and Enrolment –

Where an employer or a person liable to registration or enrolment has filed to apply for such certificate within the required time, the prescribed authority may, after giving him a reasonable opportunity of being heard, impose penalty of Rupees Five for each day of delay in case of such employer and Rupees two for each day of delay in case of such person.

Where an employer or a person liable to registration or enrolment has given false information in any application submitted under this section, the prescribed authority may, after giving him a reasonable opportunity of being heard, impose a penalty not exceeding Rs. 1000 by MAH. 20 OF   2002, s. 21 (b) (w.e.f. 1-5-2002)

Penalty for Nonpayment of Tax Section 10:

If an enrolled person or registered employer fails without reasonable cause, to make payment of any amount of tax within the required time or date as specified in the notice of demand, the prescribed authority may, after giving him a reasonable opportunity of being heard, impose upon him “a penalty not exceeding fifty per cent, of the amount of tax due” by Mah. Tax Laws (Levy & Amendment) Act, 2002 s. 23 (w.e.f. 1-5-2002).

Sumati Dinkar Jadhav

CMA Student and Traniee at Devarajan Swaminathan & Co.- Cost Accountants