AMIT BAJAJ ADVOCATE

The Punjab government, which is expecting to mop up Rs 500 crore by imposing a tax on the self-employed and salaried professionals, is looking up to Bihar to finalise the modalities. Bihar, governed by Nitish Kumar-led JDU-BJP combine imposed the professional tax in September last year and fund-starved SAD-BJP government in Punjab, led by Parkash Singh Badal, has decided to follow suit.

Punjab will be the tenth state to tax the professionals and, following the Bihar model, will be charging Rs 1,000 to Rs 2,500 depending on the salary of the employed. The slab, incidentally is one of the highest in comparison to the tax imposed in other states.

In Maharashtra, which was one of the first states to introduce the professional tax in 1975, the amount charged ranges in between Rs 60 to Rs 200. Tamil Nadu imposes a tax ranging from Rs 75 to Rs 810 on its professionals, while the West Bengal government seeks Rs 18 to Rs 200 depending on the various salary brackets of the employees.

Also, while the VAT department collects the professional tax in Bihar, the municipal corporations do the same in Tamil Nadu.

“It has been decided that in Punjab, the excise and taxation department will collect the professional tax,” an official said.

Once imposed, the Punjab government will be taxing apart from its own employees, those working for private firms, central government staff, business owners and merchants.

Though there will be different slabs of taxes varying with the income level, the maximum amount, which a person will have to pay is Rs 2,500. Interestingly, Article 276 (2) of the Constitution of India, which allows the imposition of professional tax by the state governments, has fixed this upper limit for the tax. This limit cannot be further hiked without an amendment in the Constitution.

According to finance department estimates, more than 20 lakh people will be paying the highest tax of Rs 2,500 annually.

In case of the private companies, the employer will collect the tax after getting the firm and all its staff registered with the state government. The employer will deduct the tax from the salary. In case of the government employees, the tax will be deducted at source and no registration certificate is required. All private persons who pay the tax as individuals, will be given an enrolment certificate by the government.