one of our client charitable trust is paying salary more than 20k p.m. to one employee....but they are not deducting and paying professional tax on it.....when i advised them to pay....they said we don't have offer letters, payslips and employee's income is below exemption limit. so what happens if we dont pay.
So please advise whether they are required to pay professional tax or not considering clients view
You are requested to refer the P.tax rule for the respective state. Different states have different rules regarding this.
But still, your client's contention is not tenable as income tax rules and p.tax rules are separate. The employee's income may be below the exemption limit but if as per the P.tax schedule his income is falling under any slab, then at such a rate p.tax has to be deducted.
If they deny to treat such person as their employee, as their is no proof (as offer letter, payslip are absent), in that case you need to see how such payment is booked in the books of A/c. If they don't record this payment as Salary to Employee, then they must have booked such expense under any other head (may be professional charges, commission charges etc.).
Whatever it may be, if they treat this expense as Employee Cost then P.Tax has to be deducted subject to the P.Tax rules of your state. If they treat this expense under any other head then no p.tax liability arises, but TDS provisions might have to be complied then.
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