Income Tax News: Unlocking the Mystery! What You Need to Know About Professional Tax, Check Here

Income Tax News: Professional tax is required of all business owners and employees alike. Let's first define professional tax before going into further detail. The commercial tax department of a state levies professional tax on individuals who receive compensation within its borders. Employers are allowed to withhold taxes from employee paychecks prior to salary payment. Since this is a state-specific statute, the guidelines, interest rate, and deadlines vary from state to state. Different wage groups' employees must pay different amounts of professional tax. It is not expected of residents of Union Territories to pay professional tax.

Professional Tax vs TDS

Professional tax and TDS (tax deduction scheme) are often confused. There is a notable distinction between the two, though. While income tax is collected by the federal (central) government, professional tax is collected by the state government. Professional tax is governed by the state government and is only levied against individuals who make their living from practicing their profession.

Professionals like doctors, engineers, teachers, and accountants are required to pay their taxes. States may have different taxes. On the other hand, those who work as employees or own businesses and earn money from a variety of products and services are subject to income taxes levied by the federal government. Income tax is a non-negotiable mandatory levy for all non-resident individuals. The income tax rates are set by the federal government, so each state has the same tax slab.

States where professional taxes are paid

Andhra Pradesh, Bihar, Chhattisgarh, Punjab, Meghalaya, Gujarat, Jharkhand, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Manipur, Mizoram, Assam, Nagaland, Odisha, Puducherry, Sikkim, Tamil Nadu, Telangana, Tripura, and West Bengal are the states where people pay professional tax.

Late Payment Consequences

In addition to daily interest based on the total amount owed annually, individuals who neglect to pay professional tax may also be subject to a late penalty. Every state has its own set of laws. For instance, in Gujarat, nonpayment of professional tax results in late fees and daily interest charged at the rate of eighteen percent of the annual total. In Tamil Nadu, on the other hand, neglecting to pay professional tax results in an additional 10% penalty. Employers and individuals are subject to a fine equal to three times the amount of taxes owed if they provide false or inaccurate information. Penalties for nonpayment also differ from one state to the next.

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