Professional Tax in Kerala

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Professional tax is imposed on the earnings of various professions under the Kerala Municipality Act 1994. Both working professionals and business owners are subject to this tax, which differs based on income brackets defined by the state. The Kerala Professional Tax Act, effective from 1996, governs these levies.

An amendment in 2015 adjusted the salary threshold to Rs 12,000 semi-annually for liability. Rates vary, with higher earnings facing larger tax amounts. Professionals can deduct the total tax paid annually from their taxable income. In this blog, we will discuss the implications and details further.

Applicability of Professional Tax in Kerala

In Kerala, individuals and entities must pay professional tax based on specific criteria. Businesses operating within municipal boundaries for over sixty days are taxed. This rule also applies to companies outside these areas if their main office functions in the municipality for the same duration. Residents managing businesses for over sixty years owe this tax regardless of business location.

Professionals engaged in any form of employment, art, or business within these areas for more than sixty days are also liable. Residents must pay the tax if they have been in the municipality for the required time, irrespective of where their workplace is situated. Additionally, individuals deriving income from investments in these areas while residing there are subject to taxation.

Here Is a Table of Exemptions From the Kerala Professional Tax

Sr No.	Exempted Group	Condition
1	Textile Industry ‘Badli’ Workers	Employed in Specific Textile Roles
2	Parents of Disabled Children or Individuals	Mental or Permanent Disabilities
3	Military Personnel	Under Navy, Air Force, and Army Acts
4	Individuals With Permanent Disabilities	Documented Physical Disabilities
5	Senior Citizens	Aged 65 and Above
6	Auxiliary Forces or Reservists	Serving in Kerala
7	Agents of National Savings Schemes	Linked to Specific Saving Programs

These exemptions ensure that certain groups are relieved from the financial obligations of professional tax.

Professional Tax Slab Rates in Kerala

The professional tax in Kerala is structured across various income slabs. Each slab dictates a specific tax amount payable semi-annually. Individuals earning up to Rs 11,999 are not subject to professional tax. For those earning between Rs 12,000 and Rs 17,999, the tax is Rs 120. Rates progressively increase with higher income brackets, reflecting the ability to pay. Here is the detailed slab rate:

Sr No.	Half-Yearly Income Slab	Half-Yearly Professional Tax Rate
1	Up to ₹11,999	Not Applicable
2	₹12,000 to ₹17,999	₹120
3	₹18,000 to ₹29,999	₹180
4	₹30,000 to ₹44,999	₹300
5	₹45,000 to ₹59,999	₹450
6	₹60,000 to ₹74,999	₹600
7	₹75,000 to ₹99,999	₹750
8	₹1,00,000 to ₹1,24,999	₹1,000
9	₹1,25,000 and Above	₹1,250

This structure ensures a fair contribution based on financial capability.

Kerala Professional Tax Online Payment

Paying professional tax in Kerala is straightforward through online platforms. Individuals and businesses must first register their profiles with the necessary contact and professional details. Major cities like Thiruvananthapuram, Thrissur, Kollam, Kozhikode, and Kannur facilitate these online services.

Once registered, the system evaluates income levels to determine the applicable tax rate. Payment can be made seamlessly online, aligning with the determined tax slab rates. This digital approach simplifies compliance, ensuring timely and accurate tax submissions.

Regular updates and notifications about tax dues are sent to registered users to maintain clarity and prevent delays.

Kerala Professional Tax Late Payment Penalty

Compliance with the professional tax in Kerala requires punctual half-yearly payments. The due dates are the 31st of August for the first half and the 28th of February for the second. Missing these deadlines triggers a 1% monthly penalty on the unpaid tax. Persistent non-payment could lead to a steeper penalty, potentially reaching Rs 5,000.

Businesses and individuals should set reminders for these critical dates to avoid penalties. Understanding the importance of meeting these legal obligations to prevent financial repercussions is essential. Detailed records of payments made aid in staying compliant and organized throughout the fiscal year.

Conclusion

HR professionals working in Kerala must manage professional tax in Kerala efficiently. Deductions should be computed on the slab rates of the state. HR must also keep abreast of due dates: August 31st and February 28th, respectively.

Training the employees on their tax responsibilities ensures transparency and compliance. The HR team can use the digital tools provided by local authorities to make this process more efficient.

For HR teams, remaining up-to-date on all changes in the tax legislation is key for handling tax deductions of the workforce properly and due to non-compliance penalties.

FAQs

What Is Professional Tax in Kerala?

Professional tax in Kerala is a tax levied on the income of employed and self-employed individuals within the state, administered through municipal authorities based on income slabs.

How Are Professional Tax Rates Determined in Kerala?

Tax rates are determined by income slabs defined in the Kerala Professional Tax Act. Payments vary, increasing progressively with higher income brackets.

What Are the Due Dates for Professional Tax Payments in Kerala?

Professional tax is payable half-yearly with due dates on August 31st for the first half and February 28th for the second half of the financial year.

Are There Any Penalties for Late Payment of Professional Tax in Kerala?

Late payment incurs a 1% monthly penalty on the outstanding tax amount. Severe delays can lead to a penalty of up to Rs 5,000.