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Centre Professional Tax (PT)

The Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976

Profession tax is levied under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976. This tax shall be paid by every person exercising any profession or calling or is engaged in any trade or holds any appointment, public or private, as specified in the Schedule to the Act.

Tax Schedule - Rates of tax on professions, trades, callings and employments

S. No. Class of Persons Rate of Tax
1 Salary or wage earners whose salary or wage or both, as the case may be, for a month is Rs. 25,000-00 and above Rs. 200-00 per month
2 Persons registered or liable to be registered under the Karnataka Goods and Services Act, 2017 Rs. 2,500-00 per annum
3 Self-employed persons engaged in Professions, Trades, Callings and Employments, with a standing in profession for more than 2 years, including Legal practitioners, Consultants, Agents, Chartered Accountants and Actuaries, Engineers, Health care professionals, Estate Agents or Brokers, Beauty parlours, dry cleaners and interior decorators, Journalists and Advertisement agencies, providing entertainment using Dish Antenna Cable TV, Computer Institutes selling time, Computer Training Institutes / Driving Institutes / Technical Training Institutes, Astrologers, Astropalmists, Numerologists, Vaastu consultants and Faith healers. Rs. 2,500-00 per annum
4 Horse owners and the trainers, Jockeys, Directors, Actors and Actresses (Excluding Junior Artists), Owners of Oil Pumps and Service stations, gas stations, electric charging stations, Owners of Nursing homes, Hospitals, Diagnostic centres, Clinical laboratories and X-ray clinics, other than those run by the Central Government, State Government and local bodies, Owners of Gymnasium and Fitness centres. Rs. 2,500-00 per annum
5 Educational Institutions and Tutorial Colleges or Institutes other than those run by the Central Government, State Government and local bodies. Rs. 2,500-00 per annum
6 Employers of establishments defined under the Karnataka Shops and Commercial Establishments Act, 1961, employing more than five employees. Rs. 2,500-00 per annum
7 Licensed dealers of liquors, Money lenders licensed under the Karnataka Money Lenders' Act, 1961, Individuals or institutions conducting chit funds. Rs. 2,500-00 per annum
8 Owners of transport vehicles (other than auto rickshaws) run on their own or through others under permits granted under the Motor Vehicles Act, 1988; Goods transport agencies (GTA) and Transport contractors including forwarding and clearing agents. Explanation - For the purposes of this entry Goods Transport Agency or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. Rs. 2,500-00 per annum
9 Cooperative Societies registered under the Karnataka Cooperative Societies Act and engaged in any profession, trade or calling. Rs. 2,500-00 per annum
10 Companies registered under the Companies Act, 1956 and engaged in any profession, trade or calling; Banking companies as defined in the Banking Regulations Act, 1949. Explanation - For the purpose of this entry, 'banking companies' shall include any bank whose operations are governed by the provisions of the Banking Regulation Act, 1949 (Central Act 10 of 1949). Rs. 2,500-00 per annum
11 Persons other than those mentioned in any of the preceding entries who are engaged in any profession, trade, calling or employment and who are paying tax under the Income Tax Act, 1961 (Central Act 43 of 1961). Rs. 2,500-00 per annum
12 Persons other than those mentioned in any of the preceding entries who are engaged in any profession, trade, calling or employment with a minimum of two years of standing and who are not exempted by Notification issued by the State Government from time to time. Rs. 2,500-00 per annum

Last updated on: November 2024

Employer's Obligations

  • Registration: Employers employing individuals liable to professional tax must obtain a certificate of registration in Form 1. Separate registrations are necessary for workplaces under different jurisdictions.
  • Deduction of Tax: Employers must deduct professional tax from employees' salaries or wages as per the rates prescribed in the Act. Deductions should be made every month.
  • Payment of Tax: Deducted tax must be remitted to the government treasury using Challan (Form 9) in quadruplicate. Payments must adhere to the deadlines specified by the Act and accompanying Rules.
  • Filing of Returns: Employers are required to file periodic returns in Form 5, detailing tax deductions, payments, and any outstanding balances. Returns must be filed within 60 days of the end of the financial year.
  • Record Maintenance: A register of employees indicating their salaries and tax deductions must be maintained. These records must be accurate and accessible for inspection by authorities.
  • Submission of Statements: Employers must submit an annual certificate (Form 24) summarizing deductions and payments made during the financial year.
  • Certificate Issuance: Employers are required to provide employees with certificates of tax deduction (Form 25), confirming tax deductions and remittances.
  • Penalty for Non-Compliance: Non-compliance, such as failure to register, deduct, or pay professional tax, may result in penalties and interest. Penalties include fines and possible prosecution for deliberate evasion.
  • Amendments and Changes: Any changes to registration details, such as location or nature of business, must be reported to the assessing authority for amendments.
  • Exhibition of Certificates: Employers must prominently display their registration certificate at their workplace.
  • Cooperation During Inspections: Employers must facilitate inspections and audits by granting access to records and facilities.
  • Appeals and Legal Compliance: Employers dissatisfied with assessments or penalties can appeal to the Joint Commissioner or higher authorities as per the provisions of the Act.

Explanations to the Schedule

  • Explanation I. Notwithstanding anything in this Schedule, where a person is covered by more than one entry in the Schedule, tax is payable under any one of such entries.
  • Explanation II. For the purposes of determining the liability of tax, in terms of Serial No. 4 in this Schedule, the higher number of workers and / or employees at any time during the year shall be reckoned as the basis.
  • Explanation III. For the purposes of this Schedule where any asset or business is held on lease by a lessee, such lessee shall be deemed to be the person liable under the Act.
  • Explanation IV. No tax shall be levied under this Act on any partner of a firm which is engaged in any profession, trade or calling if the tax is paid by such firm.
  • Explanation V. Notwithstanding anything contained in the Schedule, every additional place of a person enumerated in any item of the Schedule shall be deemed to be a separate person for the purpose of levy of Profession tax specified in the Schedule and nothing in this explanation shall be applicable in case of additional places of business which are exclusively used as godown for storing goods.

Compliance Matrix for Employers

Compliance AreaRequirementForm / ActionFrequency / TimelinePenalty for Non-Compliance
RegistrationObtain a certificate of registration if employing individuals liable to professional tax.Form 1Within 30 days of becoming liable.Fines or penalties as per the Act.
Separate RegistrationsRegister for each workplace under different jurisdictions.Form 1As applicable.Assessment and penalty for unregistered workplaces.
Deduction of TaxDeduct professional tax from employees' salaries or wages.Deduction at SourceMonthlyPenalty up to 50% of unpaid tax, plus interest.
Payment of TaxRemit deducted tax to the government treasury.Challan (Form 9)As per prescribed deadlines (monthly / quarterly).Interest on late payment; legal action for persistent default.
Filing of ReturnsSubmit returns detailing tax deducted and payments made.Form 5Within 60 days of the financial year-end.Late filing penalties and assessment risks.
Record MaintenanceMaintain a register of employees with details of salaries and tax deductions.RegisterContinuous maintenance; retain for 5 years.Penalty for failure to produce records during inspection.
Submission of StatementsSubmit an annual certificate summarizing deductions and payments.Form 24AnnuallyPenalty for omission or incorrect submission.
Certificate IssuanceProvide certificates of tax deduction to employees.Form 25Monthly or annually (as per practice).Fines for non-issuance or incorrect certificates.
AmendmentsNotify changes in registration details, such as business location or nature of work.Amendment ApplicationWithin 15 days of the change.Additional penalties for delayed or unreported changes.
Display of CertificateDisplay the registration certificate prominently at the workplace.Display at WorkplaceContinuousPenalty for non-compliance during inspections.
Cooperation with AuthoritiesFacilitate audits and inspections by providing records and access to premises.Provide AccessAs requested by authorities.Fines or legal consequences for obstruction.
AppealsAppeal against assessments or penalties if aggrieved.Appeal Forms (Form 18 / 19)Within the time prescribed by the Act.No appeal rights if deadlines are missed.

Applicability

Any person who is engaged in any profession, trade, calling, or employment in the State of Karnataka and includes:

  • Hindu Undivided Family (HUF)
  • Firm
  • Company
  • Corporations
  • Other Corporate Bodies
  • Any Society
  • Any Club or Association

References

Acts & Amendments

Slabs, Portals & Notifications

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