Maharashtra is one of the largest states in India and is situated on the western coast. The city of Mumbai is the capital of this state. Professional Tax Maharashtra has many tax laws that apply to individuals, business people, and companies. A professional within this state has several rights and fulfills specific responsibilities.
Professional tax is a form of indirect taxation levied on individuals, HUFs, firms, and companies. It is also known as income tax, and it is governed by the Income Tax Act of 1961. Paying professional tax online is an easy process, and it can be done using the official portal of Professional Tax Maharashtra or by visiting a specific office in your city.
Let's dive deeper into the topic to understand its workings:
1) What is Professional Tax Maharashtra?
2) Who has to pay Professional Tax Maharashtra?
3) Significance of Professional Tax Maharashtra
4) How to file the Professional Tax Maharashtra?
5) Benefits of professional tax Maharashtra?
6) How has the Government streamlined the payment of Professional TAX Maharashtra?
7) Which factors affect the Professional Tax Maharashtra?
8) How to calculate Professional Tax Maharashtra?
What is Professional Tax Maharashtra?
Professional tax is one of the two taxes levied by the state government of Maharashtra. It is an income tax levied on professionals. The other is vat. A consumption tax levied on the sale of goods and services. The professional tax is a flat-rate tax, and it is paid annually based on turnover made during the year. However, this does not apply to all professions and only applies to some professionals. These professionals have to pay professional tax to get their registration renewed.
It is a tax levied by the Government of Maharashtra on professions under the Maharashtra Finance Act, 1994. It is a tax on occupations in the State of Maharashtra. The Professional tax is charged to professionals and individuals earning an income from a profession or other business activity. The professional tax payable is to be paid every year before 31 March. The professional tax liability is calculated based on the total income earned by an individual from all his sources during that year.
Who has to pay Professional Tax Maharashtra?
Professional Tax Maharashtra has many tax laws that apply to individuals, business people, and companies. A professional within this state has many rights and fulfills specific responsibilities.
The professionals who pay professional tax have their own business or profession or are employed in any profession. If a person operates his profession or business, he must pay taxes, and if he is engaged in any profession, he should pay taxes. Professional Tax Maharashtra is the tax imposed by the Government of Maharashtra on those considered professional professions. Therefore, lawyers, doctors, chartered accountants, and company secretaries can pay Professional Tax Maharashtra.
The professional will be exempted from paying the taxes only when working for public organizations such as government departments, public sector organizations, educational institutions, etc.
Significance of Professional Tax Maharashtra
Professional Tax Maharashtra is governed as per a specific act of Maharashtra state. It is a significant tax levied on professions, trades, and callings. It is also known as Profession Tax or Profession Duty.
The tax is imposed on those who hold any trade, business, or calling in the state. Professional Tax Maharashtra is collected to maintain the hospitals, dispensaries, schools, and other public utilities. It is also used for the development of commercial and industrial undertakings. The Government makes the tax levy directly through local authorities like municipalities and district councils.
Like Professional Tax Maharashtra, professional taxes may be imposed at different rates in different states depending upon their importance in that particular state. In some cases, this tax may be levied by both central and state governments, while in some cases, it may be levied by only one of them. The tax can be paid monthly, quarterly, or annually, and it varies from state to state.
The primary purpose of this tax is to ensure that all the companies operating within the state contribute to the state's development and growth. It also ensures that there is no misappropriation of funds because it makes sure that every rupee earned within a particular territory is accounted for and goes into the revenue account of that territory.
How to file the Professional Tax Maharashtra?
Professional tax online payment is made when arrears are payable to the Government, including self-employed individuals, companies, and firms who run their business or profession and have not paid taxes regularly. Paying professional tax is not very difficult, but you need to know how to get started and complete the process successfully.
1) Visit the official website of Professional Tax Maharashtra – https://www.mahagst.gov.in/en
2) Once on the website, click on the 'New Registration' link given, and they will be taken to a new page where the guidelines document is available. If this is a first-time registration, click on the new dealer.
3) Next, you furnish all the necessary details like the Permanent Account Number (PAN). Once you complete the re-login process, you get redirected to the homepage to select VAT under the e-services tab.
4) All the trade details, like utility information and bank details, are added in the Form II of the Maharashtra State Tax Act. You are requested to upload the scanned copies on the portal for submitting the professional tax.
5) Once the registration form is filled and the necessary documents uploaded, the applicant will receive an acknowledgment slip and an enrolment certificate with a unique identification number to indicate the successful registration.
Benefits of Professional Tax Maharashtra
The professional tax department is well-established, and it has a good reputation for being efficient, fair, and thorough in its administration of the tax laws. Experienced tax officials are trained to administer the law properly and to treat taxpayers with courtesy and respect at all times.
Till now, the rules governing Professional Tax are very complicated. But, with the implementation of the Goods and Services Tax (GST) in India, there has been a significant change in the tax treatment of professionals.
It is a good idea to register for this if you are a freelancer, a contractor, or an employee who has left his company and is earning through another company.
Professional Tax Maharashtra registration can save a lot of money for you. Let's see how:
1) You will pay tax on your income as per the income tax department rules and legislations if you are a resident of Maharashtra and staying there.
2) You will have to pay only 2% professional tax if your total income is less than one lakh rupees.
3) The Professional Tax Maharashtra registration helps you to save the taxes which you have to pay on the income which comes through your employer.*
4) If you work as an employee, you don't have to pay TDS on your salary. But if you are working as a freelancer or contractor, then TDS has to be deducted from your income by the company that hires you on a contract basis or pays you by cheque.
How has the Government streamlined the payment of Professional TAX Maharashtra?
To provide a transparent and corruption-free administration, the Government of Maharashtra has introduced the e-Governance initiative. This is also to promote self-assessment of taxpayers, which will eventually lead to a reduction in demand for assessment by tax officers and ultimately result in improvement in tax compliance.
An e-filing facility is available to facilitate filing returns and professional tax payment. You can register yourself as a taxpayer by providing your basic details. This registration will enable you to file your return and make payments online.
E-filing is yet another step the Government of Maharashtra takes to effectively implement a self-assessment system for income taxpayers. The objective is to allow taxpayers to file their tax returns online without visiting a tax office. The service will be available 24x7 and enable user-friendly access through the internet on a personal computer.
It is ideal for self-employed individuals, freelancers, small business owners, professionals etc., who are not required to maintain regular books of accounts or do not have any employees; or whose payrolls do not require any mandatory compliances under the various labour laws of India.
In other words, it is a comprehensive online solution that covers all aspects of income tax return filing requirements of both salaried and non-salaried individuals and businesses.
Which factors affect the Professional Tax Maharashtra?
Many factors are considered while determining the Professional Tax of an organization. The following factors will have to be considered while calculating professional tax
- Gross Turnover
- Profit before Tax
- Net worth of the company
- Number of employees
- Capital invested in the business by the owner(s).
- Interest and profit earned by the business on that capital invested by the owner(s)
- All other incomes earned by the business which is not covered under any above categories
How to calculate Professional Tax Maharashtra?
Professional tax is a local tax payable by professionals, including doctors, lawyers, chartered accountants (CA). Professional tax is levied by the state and collected by the municipal corporation or the district collector.
The professional can calculate the professional tax liability based on the following steps:
- Calculate Gross Total Income
2. Deduct total expenses incurred during the relevant financial year:
a) Advertisement or business promotion expenses or both
b) Interest on borrowed capital
c) Depreciation of assets used for business purposes or both
3. The balance amount will be the taxable income of that year. The tax rate varies from 5% to 30%. Every individual pays professional tax on income derived from the profession but not salary income.
4. Add professional tax to other taxes like income tax, surcharge cess, etc., where applicable, to determine your total tax liability.
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Wrapping Up
The Professional Tax Maharashtra should be paid in a time-bound manner. If you are a professional, you must pay your dues to the Government on time. However, if you are unaware of paying them, there is nothing to worry about. The process of producing the professional tax is straightforward, and the tax authorities have made it clear that it can be paid through online or offline modes of payment.
Key Takeaways
- The Professional Tax Department within the Government of Maharashtra has been constituted to collect Professional Tax systematically, efficiently, and non-adversarial. The Department is responsible for transparently managing professional tax revenue through a well-established system of assessment and appeals.
- Professional tax is levied on individuals, HUFs, and firms engaged in specific professions or businesses. The term "professional" means any person who has been admitted to a particular profession under a law in force or under any ordinance made by a local or other competent authority.
- Tax authorities levy professional tax on income derived by an individual from his profession, trade, business, and vocation. It is levied on the gross receipts derived from work, trade, business, and vocation subject to prescribed ceilings.
- Thus, an indirect tax gets added up in the cost of goods and services provided by professionals. The professional tax rate ranges from 1% to 5%. Individuals having more than one profession have to pay professional tax separately on each profession. Professional Tax Return to be filed every year by every individual liable to pay professional tax on their income earned in a particular year.
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