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Professional tax query

Bijoy (Working ) (127 Points)

20 December 2010

Hi,

Can any one help me out regarding Professional Tax Treatment (Accounting as well as Taxation Part)

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14 Replies

Sunshine (Helping All) (10575 Points)
Replied 20 December 2010

hie...professional tax is covered under section 16(iii)...

in case this tax is paid by the employee it is deducted from the total salary...

in case this tax is paid by the employer it is first added to the salary and then deducted....

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(Guest)

ya agreed with sneha .

and in addition to that total amt payable in respect of any ne person shall not exceed rs.2500 per annum.

and deduction on account of professional tax in same year in which tax is actually paid

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Sunshine (Helping All) (10575 Points)
Replied 20 December 2010

hey jyotsana u sure abt this 2500 amount..i havent read it thats why asking...where did u get that?

(Guest)

ya sneha m sure

Rajesh (student) (76 Points)
Replied 20 December 2010

Proffesional tax maximum deduction is upto 2500.

in case proffesional tax is paid by the employer then the employee should treat it as perquisite and should add to the total income .Later he can cliam as deduction.

Proffesional tax can be cliamed on payment basis. If p.y Proffesional tax paid on this F.Y then that tax and current year tax cam be cliam by the assessee.

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M .K. Jha (CA Final) (484 Points)
Replied 20 December 2010

Yes Professional tax firstly include in Gross Salary

then allowable as deduction limit to 2500/- U/s 16(iii) as deduction from salary u/s 16

swapnil (CA Final) (598 Points)
Replied 20 December 2010

professinal tax = accounting treatment means when u deduct professinal tax from salary of the employee, than d employer has 2 show this professinal tax under duties and taxes = under current liability and provision and in other hand employee can claim a deduction u/s 16(iii) as deduction from income from salary.

4 more details pls see d attachment

Attached File : 57 schedule of rates of tax on professions.doc downloaded: 710 times

Chinmay (Accounts Professional) (356 Points)
Replied 21 December 2010

Hi Bijoy,

The all my friends are correct.....

But I tell you the accounting treatment for Salary...

1. Provision For Salary

Salary & Wages A/c ..Dr.

To Salary Payable A/c

To TDS Salary Payable A/c

To PF Payable A/c

To ESIC Payable A/c

To PT Payable A/c

To Other Welfare Funds Payable A/c

2. Employer Contributed in PF & ESIC.

Provident Fund A/c ..Dr.

To PF Payable A/c

ESIC A/c ..Dr.

To ESIC Payble A/c

3. Salary Paid to Employees.

Salary Payable A/c ..Dr.

To Bank A/c

4. PF, ESIC, PT & TDS Paid.

PF Payable A/c..Dr.

ESIC Payable A/c ..Dr.

PT Payable A/c..Dr.

TDS Payable A/c..Dr.

Other Welfare Funds Payable A/c.. Dr.

To Bank A/c

(Pass separate entry for each fund)

>> Notes:-

In PF = Employee’s Contribution (12% of PF Salary) + Employer’s Contribution (13.61%).

Total PF = 25.61% of PF Salary.

PF Salary = Basic Salary + DA (Ceiling limit Rs.6,500/-***)

In ESIC = Employee’s Contribution (1.75% of ESIC Salary) + Employer’s Contribution (4.75% of ESIC Salary).

Total ESIC = 6.5% of ESIC Salary.

ESIC Salary = Gross Salary (Ceiling limit Rs.15,000/-***)

In PT = Depend upon state sales tax department rates…

There is no Employer’s contribution

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 December 2010

Originally posted by : Chinmay
	Hi Bijoy, The all my friends are correct..... But I tell you the accounting treatment for Salary... 1. Provision For Salary Salary & Wages A/c ..Dr. To Salary Payable A/c To TDS Salary Payable A/c To PF Payable A/c To ESIC Payable A/c To PT Payable A/c To Other Welfare Funds Payable A/c 2. Employer Contributed in PF & ESIC. Provident Fund A/c ..Dr. To PF Payable A/c ESIC A/c ..Dr. To ESIC Payble A/c 3. Salary Paid to Employees. Salary Payable A/c ..Dr. To Bank A/c 4. PF, ESIC, PT & TDS Paid. PF Payable A/c..Dr. ESIC Payable A/c ..Dr. PT Payable A/c..Dr. TDS Payable A/c..Dr. Other Welfare Funds Payable A/c.. Dr. To Bank A/c (Pass separate entry for each fund) >> Notes:- In PF = Employee’s Contribution (12% of PF Salary) + Employer’s Contribution (13.61%). Total PF = 25.61% of PF Salary. PF Salary = Basic Salary + DA (Ceiling limit Rs.6,500/-*) In ESIC = Employee’s Contribution (1.75% of ESIC Salary) + Employer’s Contribution (4.75% of ESIC Salary). Total ESIC = 6.5% of ESIC Salary. ESIC Salary = Gross Salary (Ceiling limit Rs.15,000/-*) In PT = Depend upon state sales tax department rates… There is no Employer’s contribution

wonderful .................thanks

Bijoy (Working ) (127 Points)
Replied 12 January 2011

Hi Chinmay,

Thank you so much for explaining in detail.

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manik (no designation) (40 Points)
Replied 28 July 2014

hi any please say, what is the treat treatment in company if professional tax is paid by company for employee?

Deep Anadkat (Student CA Final ) (25 Points)
Replied 23 September 2014

hiiii....can you tell me if employer pays salary by cash and salary is above exemption limit of professional tax then employer can deduct professional tax?????