What is the new Professional Tax Rate in Delhi?

by  Adv. Abhijeet Sawant  

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professional tax in delhi

  • As its name indicates, professional tax is a tax placed mostly on professionals. It is a direct tax levied on a variety of professions, trades, and occupations and is calculated based on the income earned by these professions, trades, and occupations.
  • It applies to employees, independent contractors, freelancers, professionals, and anyone earning more than the specified sum, which depends from state to state. In this blog, we will read about Professional tax in Delhi.
  • According to article 246 of the Indian Constitution, only the Parliament has the authority to pass legislation concerning the union list, which includes income taxes. Only the concurrent and state lists confer legislative power on the state.
  • The government of the state imposes a kind of income tax called a professional tax (not all states in the country choose to levy professional tax). 
  • Article 276 of the Indian Constitution, which regulates taxes on professions, trades, callings, and employment, gives the state government the ability to pass professional tax regulations despite the fact that it is a kind of income tax. Let’s read about professional tax in Delhi.

Deduction of Professional tax in Delhi

  • According to the Income Tax Act of 1961, professional tax is a deduction from taxable income.
  • In India, unlike income tax, which is collected by the federal government, professional tax is collected by the states and union territories. 
  • A majority of Indian states impose a professional tax, although not all. Some states, such as Karnataka and Maharashtra, Delhi, and Haryana, have a professional tax, whereas others do not.
  • Self-employed individuals who are subject to the professional tax are required to pay the tax to the state government. The commercial taxes department of a certain state or union territory is the agency in charge of collecting professional tax based on tax brackets that vary by state and union territory.
  • The tax is based on a person’s yearly taxable income; however, it may be paid monthly or annually. Self-employed taxpayers must receive a certificate of enrollment in a specified way from the relevant authorities (of the concerned state).
  • In the case of salaried workers and wage earners, however, the employer must deduct and deposit professional tax from the employee’s monthly compensation (as per the applicable professional tax slab).
  • In order to deposit the deducted professional tax, the employer must get a certificate of registration from the relevant authorities.

    Consult with our experts for accurate guidance and ensure compliance with the latest professional tax regulations

How is Professional tax in Delhi calculated?

The calculation of professional tax in Delhi utilizes predetermined brackets based on monthly or yearly wages. Normally, it is Rs. 200 every month, as long as the annual total does not exceed Rs. 2500.

To calculate the professional tax in Delhi, the following steps must be taken:

  • Determine if the professional tax in Delhi is applicable.
  • If you answered yes, calculate your tax liability based on your monthly income in Step 2.
  • Review the tax rates applicable to your salary bracket. This provides a monthly estimate of how much professional tax in Delhi you may deduct.

Understanding the complexities of professional tax in Delhi may be difficult; thus, you must consult a lawyer online. Lawyers online will guide you to make your employment contract and get the employment contract registered. 

Need Help Understanding the Professional Tax Slab in Delhi? Talk to Our Experts Today!

Professional tax in Delhi

  • The state government of a given state imposes a professional tax in Delhi. 
  • Employers in Delhi withhold and remit professional tax in Delhi on the earnings of all professions. 
  • Each year, around Rs.2,500 must be paid to the state or local government as a professional tax in Delhi.
  • The professional tax in Delhi is identical to the income tax. 
  • Professional tax in Delhi is administered by the state government.
  • The increase in professional tax in Delhi to Rs.2500 has enabled the government to acquire more funds.

Who was subject to professional tax in Delhi?

Professional tax in Delhi applies to the following people and organizations:

Professional tax in Delhi applies to Companies, Firms, Limited Liability Partnerships, Corporations, Societies, Hindu undivided families, Associations, Clubs, Lawyers, Contractors, Architects, Engineers, Tax Consultants, Management Professionals, and Medical Representatives, such as Doctors.

Professional tax registration in Delhi

  • Employing personnel necessitates submitting a request for registration under the Professional tax in Delhi within 30 days. 
  • If there is more than one place of employment, separate applications must be submitted to each authority based on the place of employment that falls within their jurisdiction.
  • A delay in the payment of Professional tax in Delhi might result in an Rs.5 per day penalty. 
  • Ten percent of the tax is assessed as a penalty for nonpayment or late payment, and three hundred rupees are assessed for late submission of Professional tax in Delhi.

    Are You Paying the Right Professional Tax in Delhi? Find Out Now!

What is the new Professional tax rate in Delhi?

  • The utmost amount of Professional tax in Delhi is Rs.2500. The slab amount is determined by the individual’s total income. The professional tax in Delhi is taken monthly from the employee’s income by the employer.
  • Every month, this sum must be submitted to the state government. The payment of Professional tax in Delhi is obligatory since there are consequences for non-compliance. 

Conclusion 

If you are a Delhi-based professional, you are required by law to pay a professional tax in Delhi. This tax is not levied in every state, and each state has various professional tax rates and collection methods.

Consequently, all individuals engaged in any profession, trade, vocation, or occupation and falling under one of the classifications listed in the second column of the Schedule will be obliged to pay the State Government tax at the rate listed against such class in the third column of the Schedule.

Payment of Professional tax is necessary if you reside in a state where professional tax is levied. To know the procedure and ensure the payment of taxes on time, consult a tax lawyer now.

Adv. Abhijeet Sawant

Adv. Abhijeet Sawant

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Abhijeet Sawant is an advocate who has been offering ethical and professional legal consultancy and advisory services with a focus on achieving desired outcomes. With 7 years of independent practice, He possesses significant expertise in handling legal cases. Abhijeet completed his degree from the University of Mumbai and has been practising law independently ever since.

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