Profession tax is levied on individuals earning income by practising professions, employment, callings or trades. Since the profession tax is levied by the state government, it varies from state to state. However, article 276 of the constitution caps the upper limit on profession tax to Rs.2,500.
The commercial department of the Andhra Pradesh has been delegated the responsibility to collect profession tax in the state under the APPT (Andhra Pradesh Profession Tax) Act, 1987. Interestingly, the act explicitly bars local authorities to levy or collect profession tax in the state. The slab rates for profession tax are revised the Andhra government on an annual basis.
The current slab rates are as follows :
Types of Profession Tax Payers
Salaried Individuals: The employers are entrusted with the responsibility of paying the profession tax on employees’ behalf after deducting it from their salary. The employees can claim for the income tax deduction on the profession tax under Section 16 of the Income Tax Act, 1961.
Self-Employed: Though the same slab rate is applicable for the self-employed individuals, they need to self-deposit the profession tax. Further, they can not claim it for the tax deduction in their income tax returns.
|Annual Salary||Applicable Tax Per Month|
|From Rs.15,000 to Rs.20,000||Rs.150|
Process to Obtain Certificate of Registration
Salaried as well as self-employed individuals who are obliged to pay the profession tax need to obtain a certificate of registration. Every assessee (except the individuals earning salary or wages, in respect of whom the tax is payable by his employer) also need to obtain a certificate of enrollment which will consist the amount payable as profession tax to the concerned authority along with the due date. Therefore, such certificate shall act as a notice of demand.
In case an assessee has failed to obtain required certificate of registration or enrollment within the stipulated time limit is liable to pay a penalty which shall not be less than Rs.10 but shall not exceed Rs.20 for each day of delay.
If you have provided false information while submitting the application to obtain the certificates, you are liable to pay a penalty which shall not be less than Rs.100 but shall not exceed Rs.1,000.
However, before imposing the penalty, the taxpayer is given ample opportunity to be heard before an appropriate authority.
The due date of the profession tax payment depends on the time frame in which you have obtained your certificate of enrollment. In case you have obtained the certificate of enrollment on or before May 31 of the financial year, then you must pay your profession tax before June 30 of the year.
If you have enrolled after May 31, then you must pay the profession tax within a month of the day of enrollment.
In case you have failed to make your profession tax payment in full before the due date, you shall be liable to pay interest at the rate decided by the concerned authority time to time. Additionally, a penalty will be levied which shall not be less than 25% but shall not exceed 50% of the tax due. However, as per the APPT Act, you shall be given a reasonable opportunity to be heard before imposing the penalty.
If the taxpayer is not compliant with any provision of the act without any admissible justification, can be levied a fine ranging from Rs.500 to Rs.5000.
The Right To Appeal
The taxpayers who are aggrieved due to the imposition of penalty are entitled to appeal within 30 days of the passing of the order. The appellate authority is empowered to reduce, enhance or confirm the judgement or penalty.
However, in order to file an appeal before the appellate authority, the taxpayer must remit 12.5% of the disputed tax, penalty or interest.