• Monday, 23rd Jan, 2017

Profession Tax

WHAT IS PROFESSION TAX: AN OVERVIEW
INTRODUCTION

Profession Tax is a tax levied on a person engaged in any profession, trade, calling and employment in West Bengal. The West Bengal State Legislature enacted the “West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979” in exercise of the power conferred by the Article 276 of the Constitution of India (under Entry No. 60 of the “State List” relating to taxes on professions, trades, callings and employments). The Act came into effect on and from 1-4-1979.

 

Those who are liable to pay Profession Tax under the act may be divided into two categories:

i) Persons* engaged in professions, trades, callings and employments

ii) Employer** (Government, Public and Private Sectors who disburse salary/wages to the employees)

 

Person means any person who is engaged in any profession, trade and calling or employment in West Bengal and include (i) a Hindu Undivided Family, Firm, Company, Corporation or other Corporate body, any Society, Club or Association; & (ii) every branch or office of such firm, company, corporation or other corporate body, any society, club or association, so engaged, but does not include any person who earns wages on a casual basis on being employed for a period not exceeding 180 days in a year.

Employer means the person or the officer who is responsible for disbursement of salary or wages, and includes the head of the office or any establishment as well as the manager or agent of the employer.

Profession Tax is payable at the rates specified in the Profession Tax Schedule.

* A Person requires Certificate of Enrolment, annual payment of tax, but NOT filing of any Return

** An Employer requires Certificate of Registration, monthly payment of tax and filing of annual Return

 

ENROLLMENT

Every person who is covered by entry no. 2 to 4 of the “Schedule” appended to the Act is required to obtain an Enrolment Certificate within 90 days from the date of liability to pay tax. A person liable to pay tax shall apply for enrolment on-line through PT_Enrolment module. Where an applicant has more than one branch or office or place of work in West Bengal, he may, at his option, make a single application for the principal & the branches/offices. In case a person is covered by more than one entry of the Schedule, the higher/highest rate of tax specified under those entries shall be applicable. If a person willfully fails to apply for enrolment within 90 days from the date of liability, penalty of Rs.100 for delay of each English calendar month or part thereof may be imposed. In addition to this, there remains the provision of punishment with simple imprisonment with or without fine for the said default.

 

DETERMINATION OF TAX

If an enrolled person fails to pay due tax or pay less than the amount actually payable by him, the concerned Deputy Commissioner / Profession Tax Officer shall determine the tax payable by him after service of notice in Form-X. If any person fails to get himself enrolled even after being liable to pay tax, the concerned Deputy Commissioner / Profession Tax Officer is to determine the tax payable by him after service of notice in Form-XII. However, with effect from 01-04-2005, determination of tax of both un-enrolled and enrolled persons is limited to three years from the end of any year or period for which such determination is to be made.

 

REGISTRATION

Every employer is liable to deduct profession tax from the salary or wages payable to his employee(s), as per the slab mentioned in Serial No.1 of the Schedule. Such employer (not being an officer of Government) is required to apply and secure a Certificate of Registration. An employer who is liable to pay tax shall apply for registration on-line through PT_Registration module. The application is to be made within 90 days from the date of liability. An employer having more than one place of work within the jurisdiction of different authorities shall make separate application for registration. However, the Commissioner of Profession Tax may allow an application for single Registration for the whole of West Bengal. If an employer willfully fails to apply for registration within 90 days from the date of liability, penalty of Rs 500 for delay of each English calendar month or part thereof may be imposed. In addition to this, failure to apply for registration is an offence punishable with simple imprisonment with or without fine.

 

SALARY AND WAGES

Salary and wages shall include - Pay, Dearness Allowance and any other amount paid by way of allowance, all remunerations received on regular basis whether payable in cash or kind; honorarium, perquisites and profit in lieu of salary as defined in Section-17 of the Income Tax Act, 1961; encashment of leave amount (excluding payable on retirement or on death of the employee); subsistence allowance, leave concessional pay. Salary and Wage shall not include : Medical reimbursement, traveling allowance, reimbursement of conveyance charges, stipend paid to trainee, salary paid to apprentice under Apprentices Act, leave travel assistance payment, statutory Bonus, gratuity, lay of compensation and ex-gratia payment. Pension granted to an employee is not salary and hence pensioner are not liable to pay Profession Tax on pension.

 

PAYMENTS

Profession Tax can only be paid online through “GRIPS” (web-portal of the Finance Department, Government of West Bengal). Profession Tax is required to be paid by the enrolled persons on or before 31st July of each financial year. For registered employers, profession tax is required to be paid monthly. If an employer or an enrolled / un-enrolled person fails to pay tax, within the due time, he shall be liable to pay a simple interest @ 1% per month or part thereof, on due tax.

 

RETURN

All Registered employers are required to submit returns electronically through PT_Return module. The hard copy of the return, as electronically transmitted, along with the acknowledgement and tax paid challan(s) are also required to be furnished within 15 days of the following month to the prescribed authority. The return period is annual. Commissioner of Profession Tax or Additional Commissioner of Profession Tax may accord permission, on the application of a registered employer having more than one place of work under the jurisdiction of different authorities, for furnishing a “consolidated return and to pay tax centrally (in respect of all such places of work) from his principal place of business. A Registered Employer can file revised return, to rectify any mistake or omission, within the due date of filing the next return. For late filing of Return, late fee is payable @ Rs 200/- for the first month of default and Rs 100/- for each subsequent month or part there-of. Non-submission of return is an offence punishable with simple imprisonment with or without fine. In addition to this, such return defaulters will be subject to compulsory assessment and penalty. No return is required to be filed by an enrolled person.

 

ASSESSMENT

There exists provisions for assessment (of tax etc) in the following cases:- (i) If an employer fails to get himself registered; (ii) If a registered employer fails to furnish return(s); (iii) If the Prescribed Authority is not satisfied that the return filed by a registered employer is correct and complete. However, if a registered employer submits the return which is complete and self consistent and the amount of tax, interest & late fee (if any) is paid in full according to such return, the return so furnished shall be “Summarily Assessed” on the date of submission of such return. Introduction of Audit :- The concept of “Audit” has been introduced in the Profession Tax to check the veracity of return(s) of certain numbers of dealers / tax payers.

 

APPEAL / REVISION

An appeal shall lie to the Joint Commissioner against an order of assessment of the Deputy Commissioner / Profession Tax Officer. For an appellate order passed by the Joint Commissioner, revision shall lie to the Senior Joint Commissioner of Profession Tax. For any order other than the assessment order, revision shall lie in the same manner. Memorandum of appeal or application for revision is to be made in duplicate in Form-XIV, within 60 days from the date of receipt of the order.

 

AMENDMENTS, CANCELLATION, DUPLICATE EC / RC

There are the provisions in the Act:- (i) to amend the certificate of Enrolment / Registration in respect of any change of constitution, nature of activity, address etc; (ii) to cancel the Certificate of Enrolment in case of cessation of profession or death of a person. Certificate of Registration can be cancelled in the case of cessation of liability. All application for amendment (& surrender) of certificate shall have to be filed online.

 

EXEMPTION

The State Government may make an exemption or reduction in the rate of tax payable by any class of persons by issuing notifications. At present the members of the forces as defined in the Army Act, 1950, the Air Force act, 1950, and the members of Indian Navy as defined in the Navy Act, 1957 serving in any part of West Bengal and drawing pay & allowances as Army or Air Force or Navy, as the case may be, including the members of auxiliary forces or reservists, or reserve and auxiliary services serving in any part of West Bengal and drawing pay and allowances as such auxiliary forces or reservists, or reserve and auxiliary services, as the case may be, under the budgetary allocations of the defence services, are exempted from payment of Profession Tax w.e.f. 01.04.1979.

 

DIGITALIZATION

Digitization in various tax departments in India has started gaining traction since beginning of twenty-first century. The Profession Tax wing of West Bengal is no exception to this digitization wave. The legacy application that was developed in 2002 lasted for a decade. This application was a replica of the manual process of that time. Recently, the Commercial Tax Department has taken an initiative that aims to make the Profession Tax unit lean and paperless in the true sense. As on date, there are some basic fully-online services involved in this system; these are:

  • Enrolment (New applications and generation of dematerialised certificate, Amendments and Cancellations thereof)
  • Registration (New applications and generation of dematerialised certificate, Amendments and Cancellations thereof)
  • Payment of tax (through the web-portal of the Finance Department, Government of West Bengal, named GRIPS, either completely online through net-banking/Debit Card or through counter payments physically at the Bank Counters but that too only using e-challans generated through GRIPS)
  • Filing of return (only for the registered employers)
  • Issuance of Profession Tax Payment Certificate (Completely dematerialised which are to be generated online without any manual intervention from any Government official).
  • Government Department ID Number Generation (Government Officers who act as employers do not require any registration and need not file returns. For this section of employers (i.e. Govt. officers), an online Government ID number is allotted through the concerned module.

As a result of the successfully on-going e-services, the requirement of visiting the profession tax office has either been completely done away with or lessened to great extent. Further, the dream concept of ‘Profession Tax- Any Time… Any Where’ could be materialized rendering great relief to the tax payers. In this endeavour, state of the art web-based applications and Database Servers (technical specifications given separately) have been installed for providing e-services to the external as well as internal stakeholders. All the related softwares, for external and internal processing, have been developed and maintained by National Informatics Centre (NIC). These cover the major business processes relating to functional areas of the profession tax administration. This has revolutionized the services provided by the profession tax department.

Source: Profession Tax, Last Updated on: 23rd Jan, 2017

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