Updated : January 31, 2024Karnataka Professional Tax - Due Date & Amended Schedule
Overview : "Karnataka Professional Tax" is a tax imposed by the Karnataka State Government under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 on individuals and organisations engaged in any profession, trade, or employment. To comply with this tax regulation, one must register or enrol with the professional tax department and pay the due amount within the specified deadlines. Failure to comply with the regulations may result in penalties. This article contains helpful information regarding Karnataka Professional Tax.
Levy & Collection of Karnataka Professional Tax
Section 3 of the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 states that every individual who is engaged in any profession, trade, or appointment, or employed in any way within the State of Karnataka, is liable to pay tax to the State Government as per the rate specified in the Schedule. However, the maximum rate of professional tax is limited to Rs. 2500. Moreover, senior citizens who are over sixty years of age are exempted from paying the tax. Also, tax is only payable if the period of employment is at most 120 days in a year.
Employer's liability to deduct and pay tax on behalf of employees
As per Section 4 of the Income Tax Act, if an individual earns a salary or wage, their employer must deduct the tax payable under this Act from their salary or wage before paying it to them. The employer is responsible for paying the tax on behalf of all employees, regardless of whether the deduction has been made at the time of payment. Professional Tax Rate on Salary & Wage-earners (w.e.f. 1st April 2023)
| S.No | Monthly Salary in Rs. | Tax Payable per Month |
|---|---|---|
| 1. | Less than ₹ 25,000 | Nil |
| 2. | Rs. 25,000 and above | ₹ 200 |
Professional Tax on Company, LLP, GST Registered Taxpayers, etc.
The Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976, has a schedule that lists the different professions and the corresponding annual professional tax that taxpayers in Karnataka are required to pay. You can refer to the official schedule of Karnataka Professional Tax for a complete list of details. However, the table below provides a simple summary for easy understanding.
| S.No | Category of Taxpayer | Prof Tax (Annual) |
|---|---|---|
| 1. | Separate Legal Entities
| ₹ 2500 |
| 2. | GST Registered Taxpayers | ₹ 2500 |
| 3. | Employers of establishments defined under the Karnataka Shops and Commercial Establishments Act, 1961, employing more than five employees. | ₹ 2500 |
| 3. | Other professionals | See Schedule |
Note for new taxpayers (Less than 120 days in FY)
As per the proviso of Section 3(2) of the Karnataka Tax on Profession, Trades, Callings and Employments Act, 1976, a person is not liable to pay any tax if the duration of their engagement in the profession, trade, appointment, or employment does not exceed 120 days in a given year.
Table of Due Dates of Karnataka Professional Tax
| S.No | Particulars | Details |
|---|---|---|
| 1. | Time limit to apply for Enrollment (PTEC) | Within 30 Days of Incorporation or Starting the business. |
| 2. | Time limit to apply for Registration (PTRC) as an Employer | Within 30 days from the date of becoming liable to pay tax (PTRC) |
| 3. | Due Date for Payment of PTEC | 30th of April every year |
| 4. | Due date of PTEC Return | 30th of April every year |
| 5. | Due Date for Payment of PTRC | 20th of every succeeding month |
| 6. | Due Date for Monthly PTRC Return | 20th of every succeeding month |
| 7. | PTRC Annual Return | Within 60 Days of end of FY (30th May) |
Applicability of PTEC for Company Directors in Karnataka
As per NOTIFICATION-2 (02/2023 )FD 09 CPT 2023 dated 13/07/2023, directors of companies registered in Karnataka and those nominated by state-owned financing agencies are exempt from professional tax. This interpretation is based on the professional tax enrollment portal’s Main Class list, excluding directors of companies registered in India. The exemption applies to directors under the Companies Act as per the PT filing portal: https://pt.kar.nic.in/Profile. However, Directors, Actors, and Actresses (Excluding Junior Artists) must pay professional tax and fall under serial number 4 in the prescribed schedule (DPAL 06 SHASANA 2023). Please refer to our detailed article for information on Professional tax applicability to Company Directors in Karnataka.
Applicability of PTEC for the Partners of LLP or Firm in Karnataka
The Limited Liability Partnership (LLP) is treated as a separate taxable entity in the Karnataka professional tax system. Therefore, the partners of the LLP are not required to pay professional tax (PT) as individuals. This is not the case for traditional partnership firms, which may not be required to pay PT if their activities do not amount to a profession, trade, or occupation or are not registered with GST, Income Tax, or Shops & Establishments. In such cases, if the partnership firm is not paying the professional tax, the partners of the firm become liable for payment of PT. For a more detailed analysis of the applicability of professional tax on partners of LLP or traditional partnership firms.
Applicability of EPFO/ESIC
Newly incorporated companies are not required to comply with the EPFO (Employee Provident Fund Organization) or ESIC (Employees’ State Insurance Corporation) provisions until the number of employees reaches 20 for PF (Provident Fund) and 10 for ESIC. Please note that ESIC coverage cannot be taken voluntarily, so compliance with ESIC is only possible once the number of employees reaches ten or more. In the case of PF, companies can opt for voluntary coverage with the consent of most employees. In that case, compliance with the PF scheme will become mandatory.
Professional Tax Liability for additional places of business
A common question is whether an establishment registered under the Karnataka Professional Tax that establishes new branches within the state – within the same city or any other city in the state – would require professional tax for the new office. According to the Schedule for levying the Profession Tax, every additional place of business of a person listed in any Schedule item will be considered a separate entity. However, this explanation will only apply to places of business used as godowns for storing goods. Learn More
Interest & Penalty under the Karnataka Professional Tax
| S.No | Particulars | Details |
|---|---|---|
| 1. | Penalty for Non-Registration in case of the employer (PTRC) or Non-Enrollment (PTEC) | ₹ 1,000 |
| 2. | Penalty for Non-Filing of PTRC/PTEC Return | ₹ 250 |
| 3. | Interest on delay in payment of PTEC/PTRC | Simple interest at 1.5% of the amount of the tax due for each month or part thereof for the period for which the tax remains unpaid |
| 4. | Penalty for Non-Payment of PTEC/PTRC |
|
Conclusion
The Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976, imposes a professional tax on different categories of taxpayers in Karnataka. The Act's schedule provides the schedule of professions and corresponding annual taxes. Companies, LLPs, partnership firms, trusts, and societies are liable to pay a yearly tax of Rs. 2500. GST-registered taxpayers and employers of establishments defined under the Karnataka Shops and Commercial Establishments Act, 1961, employing more than five employees are also required to pay an annual tax of Rs. 2500. New taxpayers are exempt from paying the tax if their engagement in the profession, trade, appointment, or employment does not exceed 120 days in a given year. The due dates for applying for enrollment and registration, payment of PTEC and PTRC, and filing of returns are also specified in the Act.
