Your Complete Guide to Registering for Professional Taxes – Freelancers Included

When March ends there is one task that becomes the center of focus for the next half year for all professionals. Yes, you must already be fully aware of it: Filing Taxes. To be honest, I had very little knowledge about taxes when I started work. All I knew was I had to pay taxes now that I have started earning on my own. Apart from Income Tax, there was Professional Tax and Welfare Tax that were part of my salary slip. I really thought I had to pay Professional Tax because I had a professional degree and worked in the IT sector. Didn’t I tell you I had minimal knowledge about taxes. To people who want to know about the importance of professional tax, this will be your guide to it. I will cover the basics and also how it can be done online.

  1. What is Professional Tax?
  2. Is it there because I am a part of the IT sector?
  3. Who is responsible to pay Professional Tax?
  4. How often does one pay Professional Tax in a year?
  5. Why does it vary from state to state?
  6. Is it required for Freelancers?
  7. How to apply for Professional Tax online?

What is Professional Tax?

According to Article 276(2) of the Indian Constitution, “Professional tax is levied on all professions, trades, callings and employments based on the taxable income made by an individual or company from the profession.”

Simply put, Profession Tax is the tax paid by every individual earning an income from a profession. It is charged on employees, on entrepreneurs, freelancers and all professionals whose income exceeds the tax slab. Professional Tax is deducted by the employer from the salaries of their employees and paid to the state.

Is it there only because I am a part of the Information Technology (IT) sector?

No. IT sector like any other profession is a part of service industry. Since majority of youngsters work in the IT sector it looks like the tax is levied only from the high earning crowd. These taxes are applicable for all types of companies too – from Private Limited companies to one-person companies, partners of (Limited Liability Partnerships)LLP to partnership firms and even sole proprietors. If you are a salaried individual or an employer, you pay Professional Tax.

Who is responsible to pay Professional Tax?

If you are a salaried individual, then your employer deducts it from your salary and pays it to the State Government. If you practice a profession, but are not under an employer (self-employed), then you can register yourself and pay it at banks with the registration number provided. Professional Tax Payment can be done easy online quickly.

How often does one pay Professional Tax in a year?

It is collected on a monthly basis from the employees salaries. Employers must pay the State government every year. If you are not working for any employer, but still practice a profession, then you must register yourself and pay your professional tax.

Why does it vary from state to state?

Unlike Income Tax which is collected by the Central Government, Professional Tax is collected by the State Government. Taxes vary in each state according to the tax slab in place and the infrastructure it provides to a professional to carry out their profession in that state. Some states do not impose them, however a majority of states in India levies tax from its professionals.

For example, the Slab Rates in Tamil Nadu on salaried income is as follows:

For individuals with

  • Salary less than Rs. 3500, the amount payable in NIL.
  • Salary between Rs.5001 and Rs. 9000, the amount payable is Rs. 40.
  • The maximum amount payable in a year by an individual is Rs. 2500

Is it required for Freelancing?

A plethora of work opportunities encourages most people to freelance today. Freelancing and working outside the cubicle has become today’s way of life. In other terms, it is also called self-employed. Freelancers take work on assignment basis. They do not work for a fixed salary. An individual’s growth after the evolution of the web offers attractive earning ventures. If you are an individual in the blogging world and you earn income through:

  • Affiliate sales
  • Advertisements on your blog/website
  • Web content, Search Engine Optimization, Blog Consulting, Web Designing, Web Development and Web Coaching.

You are eligible to pay Professional Tax. If you are a beginner, you can still register to be on the safe side.

How to Register for Professional Tax online?

The best advice would be to do it online. Vakilsearch provides assistance to professionals, companies and individuals to register for Professional Tax in 3 quick steps:

1. Data Check:

As an individual or company, we will have a set of documents to be submitted for registration. Documents such as PAN card, ID Proof, Address Proof, Employee details, Photo proof,etc., must be sent to your assigned team and they will do data check from their side. Once all the customary verifications are done, the team processes the application.

2. Vendor Connect:

An affiliate will be appointed to process the submitted application. All follow-ups and post-process updates will be handled by the team. An expert team will guide you through your entire process smoothly.

3. Receipt of Tax Number:

Once the application is submitted and processed, the TIN number will be issued within 15 working days. The maximum time taken for a smooth process will be 7 to 10 working days.

When knowledgeable and efficient people form a team, they make things effective and simple. Working with Vakil search will save your time, save your travel, help in smooth registration and payment of your taxes.

Submit today to have a stress-free filing!

About Jayanthy Govindarajan

I share the reflections of my mind here as a mommy blogger. I share my parenting experiences and life experiences with gratitude.

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