Palak Lotiya (Legal Content Writer/ Editor Resource Person) 10 December 2009

Professional Tax

Hi All,

I am associated with an educational institution in Gujarat as an independent content writer. They make monthly payments as I raise invoice. Suddenly they deducted professional tax @ 10% from the last payment made to me as the total payment made to me since April 2009 exceeded Rs. 20000.

Is this limit of Rs. 20000 correct?

Can i claim exemption from such deduction?

Is it possible to avoid such deduction from further payments made to me?

Thanks

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3 Replies

V. VASUDEVAN (LEGAL COUNSEL) 10 December 2009

PLEASE REVIEW THE ARTICLE EX-BUSINESS STANDARD, REGARDING WIDENING OF NETWORK FOR PROFESSIONAL TASK. HOPE THIS CLARIFIES YOUR QUERY. VASUDEVAN

Ashish Amin / Mumbai/ Gandhinagar March 21, 2008

After imposing a tax burden of Rs 880 crore by way of increasing the value-added tax, the Gujarat government has hiked professional tax by 10-fold.

The government has already prepared an amendment to the Gujarat State Tax on Professionals, Trades Callings and Employment Bill (1976), which will be introduced in the ongoing budget session in the Assembly next week.

Currently, professional tax for the salaried class is Rs 20 per month to Rs 80 per month while for traders and businessmen, it ranges from Rs 150 per annum to Rs 1,500 per annum.

This is likely to go up to Rs 2,500 per annum for traders and business class, while the salaried people may have pay Rs 200 per month.

Besides, the government has widened the net and included a new set of professionals such as solicitors, notaries, doctors, architects, chartered accountants, and insurance and professional consultants other than building contractors, commission agents and brokers, who will have to pay Rs 2,500 per annum.

Auto brokers, tour operators, travel agents, cable operators, advertising agencies, tuition classes, tutorial teachers, computer classes, driving school owners, party plot owners, ‘angadias’ and couriers, health clubs and entertainment park owners too would have to pay Rs 2,500 per annum. Currently, this category is covered under the slab of Rs 150-1,500 per annum.

Partnership firms, factories under the Factories Act -1948, and shops registered under the Bombay Shops and Establishment Act among others would have to shell out Rs 2,500 per annum.

All traders registered under VAT will have to pay Rs 2,500 per annum as against their present slab of Rs 150-1,500 per annum. However, traders having a turnover of less than Rs 2.5 lakh will be exempt from the tax.

Transporters and money lenders too will have to pay Rs 2,500 per annum as professional tax.

As per the present structure for the salaried people, there is no professional tax below Rs 3,000 per month. While between Rs 3,000 and Rs 6,000, the tax is Rs 20 per month. Between Rs 6,000 to Rs 9,000 per month, the tax is Rs 40 per month.

For a monthly salary of Rs 9,000 to Rs 12,000, the tax is Rs 60 per month. While the tax is Rs 80 per month for monthly salary upwards of Rs 12,000 per month.

Asha Pole (Legal) 10 December 2009

Palak, for your information, the deduction is not towards professional tax, the amount that has been deducted from your invoice is towards tds on professional charges. As per SEC 194J of Income Tax act, in any given F.Y if the total invoice raised by you crosses Rs. 20000, then the person making the payment is liable to deduct tax deducted at source for the work done by you. Since you are delivering a professional service, you are being tds on professional fees

I hope you get the idea