Professional Tax & Labour

Welfare Fund

By Munab - CPO
 Professional Tax

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 Professional Tax is a source of revenue for
the State Government

Professional Tax is a State tax, to be paid to the state government,

levied and collected by the Commercial Taxes Department of the State
Governments, in some states levied by particular Municipal
Corporations. State Governments levied professional tax as per Article
276 of the Constitution of India.

“The total amount payable in respect of any one person to the

State or to any one municipality, district board, local board or
other local authority in the State byway of taxes on professions,
trades, callings and employments shall not exceed two thousand five
hundred rupees per annum.”

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 Professional Tax Applicable States & UT’s

Andhra Pradesh Gujarat Karnataka Telangana

Kerala Maharashtra West Bengal Bihar

Madhya Pradesh Assam Jharkhand Odisha

Manipur Meghalaya Mizoram Nagaland

Sikkim Punjab Tripura Tamil Nadu

Puducherry

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 Professional Tax not-applicable States and UT’s

Arunachal Pradesh Chhattisgarh Goa Haryana

Himachal Pradesh Rajasthan Uttar Pradesh Uttarakhand

Andaman and Dadra and Nagar

Nicobar Islands Chandigarh Haveli Daman and Diu

Jammu and
Delhi Kashmir Ladakh Lakshadweep

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 Professional Tax Registration
Requirement of registration under Professional Tax Act.

Certificate of Enrollment (EC) & Certificate of Registration (RC)

Difference between EC & RC

PTEC Registration
PTRC Registration

Professional Tax Registration

Stands for Professional Tax Enrollment Certificate
Certificate

A certificate obtained by an employer to

A certificate obtained by an
pay their own professional tax, as well as
employer to deduct and deposit
Description by professional practitioners such as CAs,
professional tax from employees’
Doctors, Advocates, Architects, etc. to
salary.
pay their own professional tax.

To deduct and deposit

For professionals to pay their own
Purpose professional tax from employees’
professional tax
salary.

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 List of Documents Required for the Registration

1. PAN Card of Company and must be attested by the Director of the Company.
2. Incorporation Certificate of the Company.
3. Memorandum and Articles of Association (MOA).
4. Address Proof of the Company - Ownership papers in case the premise is owned by the
applicant, in other cases rent agreement and no objection certificate from the owner of
the premises.
5. Bank Account of Company, Cancelled Cheque and Bank Statement.
6. List of Directors.
7. Passport Size Photographs of all Directors.
8. Documents of the Directors - PAN card, ID proof such as Passport, Driving License,
Voter Card, Aadhar Card is acceptable and Address proof as Electricity Bill, Telephone
Bills and other utility bills.
9. Aadhar Card of the Company.
10. Board Resolution passed by the Director of the Company authorizing Professional Tax
Registration.

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 Wage / Salary Definition under PT Act

Karnataka Maharashtra

Includes pay or wage, dearness Includes pay or wages, dearness

allowance and all other allowance and all other
remunerations received or receivable remunerations received by any
by any person including any amount person on regular basis, whether
received by way of arrears of salary or payable in cash or kind, and also
bonus by whatever name called . includes perquisites and profits in
'bonus' shall be spread over for lieu of salary
twelve months of the year or to such
number of months the bonus relates [but does not include bonus in any
for purposes of computation of form and on any account or gratuity]
'Salary' or 'Wage' for such months.
Where arrears of salary are received
in part or full, then such arrears shall
be spread over for the relevant
months.
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 Avoid dual Taxation
“Provided further that, where any person earning a salary or wage is
simultaneously engaged in employment or more than one employer, and such
person furnishes to his employer or employers a certificate in the prescribed
form declaring inter alia (among other things), that he shall get enrolled under
the Act and pay the tax himself, then the employer or employers of such
person shall not deduct the tax from the salary or wage payable to such
person and such employer or employers, as the case may be, shall not be
Liable to pay tax on behalf of such person”

The Above is clear that Employee responsible to submit the Certificate to avoid
the dual taxation within State.

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 Exempted employees Under Professional Tax

• Professional Tax not applicable on Senior Citizens (Above 65 Years)

• For Karnataka and Assam – No tax shall be payable by person who

have attained 60 years of age.

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 Key Points

• It is compulsory and on failing, will be penalized

• Professional Tax payments exempted from Income Tax and can be

shown as a deduction during filing of Income Tax. As per Section 16 (iii)
of the Income Tax Act 1961, the profession tax paid by an employee is
allowed as a deduction from his/her gross salary income.

• The Professional Tax to be deducted from employee’s salary,

• Professional Tax remitted – Monthly / Quarterly / Half yearly /

Annually – As per the requirement of the state.

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 Employer Actions

• Registration of EC / RC

• Employer is responsible for deducting the Professional Tax from

the salary of his employees and paying the amount so collected to
the appropriate State Government.

• Employer has to furnish a return to the tax department in the

prescribed form within the specified time.

• Display the Certificate of Registration or the Certificate of

enrolment, as the case may be, shall display conspicuously at his
place of work Certificate of Registration or the Certificate of
enrolment or a copy thereof.

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 Professional Tax payments - Monthly

• Gujarat
• Karnataka
• Maharashtra
• Telangana
• West Bengal
• Madhya Pradesh
• Odisha
• Andhra Pradesh
• Assam
• Mizoram
• Nagaland
• Tripura
• Punjab
• Sikkim
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 Professional Tax paid – Quarterly

• Jharkhand – Monthly deduction

Professional Tax paid – Half Yearly

• Tamil Nadu
• Kerala
• Puducherry

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 Professional Tax paid – Yearly
• Bihar
• Manipur
• Meghalaya

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 Employer Professional Tax or Enrolment Tax

• Every employer liable to make the professional tax payments on behalf of the
earnings.

• Legislation clarifies the Professional Tax rates not exceeding Rs. 2500 per year in
respective states.

• Few states the Enrolment tax collected against each branch and the Slab rates
differ from one other.

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 Penal Provisions under Professional Tax Act

• Failure or delay in remittance liable for the penalty or interest or both

at the prescribed rate.

• Any person or employer who, without sufficient cause, fails to comply

with any of the provisions of this Act, or the rules framed thereunder
shall, on conviction, be punished with fine which may extend to five
thousand rupees and when the offence is a continuing one, with fine
which may extend to fifty rupees per day of such continuance of the
offence.

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 Labour Welfare Fund(LWF) and
Workers Welfare Fund (WWF)

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 Applicability

The Labour Welfare Fund Act is not applicable to all category of

employees working in the establishment. It depends upon the wages
earned and designation and nature of responsibility of the employee.

Also, needs to check the total number of employees working before

extending this Act to their establishment.

The applicability of the Act based on the number of employees may

differ depending upon state specific Act.

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 LWF Applicable States and UT’s

Andhra Pradesh Chandigarh Chhattisgarh Delhi

Goa Gujarat Haryana Karnataka

Kerala Madhya Pradesh Maharashtra Odisha

Punjab Tamil Nadu Telangana West Bengal

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 LWF Not Applicable States and UT’s
Andaman and Himachal Pradesh Meghalaya Tripura
Nicobar Islands

Arunachal Jammu and Mizoram Uttar Pradesh

Pradesh Kashmir

Assam Jharkhand Nagaland Uttarakhand

Bihar Ladakh Puducherry

Dadra and Nagar Lakshadweep Rajasthan

Haveli

Daman and Diu Manipur Sikkim

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 LWF Registration
Few States required registration under LWF Act

List of Documents Required for Registration.

1. Incorporation Certificate of the Company.

2. Memorandum and Articles of Association (MOA).
3. Address Proof of the Company - Ownership papers in case the premise is owned by
the applicant, in other cases rent agreement and no objection certificate from the
owner of the premises.
4. Bank Account of Company, Cancelled Cheque and Bank Statement.
5. List of Directors.
6. Documents of the Directors - PAN card, ID proof such as Passport, Driving License,
Voter Card, Aadhar Card is acceptable and Address proof as Electricity Bill, Telephone
Bills and other utility bills.
7. Aadhar Card of the Company.

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 Who is a Employee under LWF
Karnataka
Any person who is employed
for wages to do any work
skilled or unskilled, manual or
clerical, in an establishment
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Maharashtra
Any person who is employed for hire or reward to
do any work, skilled or unskilled, manual, clerical,
supervisory or technical in an establishment
directly by the employer or through contractor or
any other agency,
but does not include any person-
(i) who is employed mainly in a managerial
capacity,
(ii) who, being employed in a supervisory
capacity, draws wages exceeding three
thousand five hundred rupees per mensem, or
exercises powers or carries out, either by the
nature of the duties attached to the office, or
by reason of the powers vested in him,
functions mainly of a managerial nature, or
(iii) who is employed as an apprentice under the
Apprentices Act, 1961
 Labour Welfare Fund Remittance -
Monthly
• Chandigarh
• Haryana
• Kerala – WWF
• Punjab

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 Labour Welfare Fund Remittance – Half-
Yearly
• Chhattisgarh
• Delhi
• Goa
• Gujarat
• Kerala – LWF
• Madhya Pradesh
• Maharashtra
• West Bengal

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 Labour Welfare Fund Remittance –
Yearly
• Andhra Pradesh
• Karnataka
• Tamil Nadu

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 Purpose of the Labour Welfare Fund

Labour welfare implies the setting up of minimum desirable

standards of the provision of facilities like health, food, clothing,
housing, medical assistance, education, insurance, job security,
recreation etc. Such facilities enable the worker and his family to lead
a good working life, family life and social life.

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 Benefits out of LWF
• Tailoring Centres ,
• Pre-schools
• Educational Scholarship
• Educational Incentive
• Book Allowance
• Assistance for Basic Computer Training
• Marriage Assistance Scheme
• Spectacles Assistance
• Typewriting /Shorthand Assistance
• Assistance for Accidental Death and Funeral Expenses
• Assistance for Natural Death and Funeral Expenses
• Hearing Aid, Artificial Limbs and Three Wheelers
• & More..

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 Unpaid Accumulation
If an Employee's wage is unpaid due to any reason and such amount is not claimed by
such employee or any of his Legal Heir (in case of his death) within the period of three
years from the date on which it became due then employer needs to deposit such unpaid
accumulations to the Labour Welfare Board.

In this regard, the liability in respect of aforesaid accumulation shall be deposited to the
Labour Welfare Board in Cheque / Demand Draft along with the statement of unpaid
accumulations in the prescribed format (payment due to the employees but not made to
them within a period of three year from the date on which they became due).

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 Penal Provisions under Labour Welfare Act

Any person who willfully contravenes any provision of the Act shall on
conviction be punished for the first offence with fine which may extend
to five hundred rupees or with imprisonment for a term which may
extend to three months and for the second and subsequent offences,
with fine which may extend to one thousand rupees or with
imprisonment for a term which may extend to one year or with both.

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