Professional tax is governed by Punjab state development tax act and rules, 2018. The professional tax was levied on April 19, 2018. PSDT is a state tax imposed by the government of Punjab which covers taxation on income under the heads salary and business/profession.

The income to be considered under the act for imposing tax should be of same year for which the tax has to be paid i.e for paying tax of 2018-2019 the income will be considered of the financial year 2018-2019.

Additionally, the government recently clarified that total income after deductions of section 80C to 80U is to be considered. If the taxable income is above the maximum exemption limit of Rs 250000/- for persons, the development tax is applicable. In cases of firms, companies, trusts, etc if there is a profit of any amount no matter how minimal, development is applicable.

The development tax will be payable even if the individual has taken rebate under section 87A.

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Who is exempt under the act?

• Senior citizens
• People engaged in agricultural activity

Under the radar of the act every business comes that operates in Punjab. In case the company operates in Punjab through a chain of branches by a head office elsewhere, the employees under such branches will not be exempt from payment of professional tax.

Applicability of professional tax (Section 5) – Who has to register and pay tax?

• Employee – Employer deducts tax from salary Rs 200 per month.
• Business/Profession – The tax is to be paid annually of Rs 2400 under section 6.

1. Persons include individuals, HUF, Firm, company, etc.
2. Partners are liable to register since they are not employees of the firm.
3. Directors who withdraw salary need not register under PSDT separately.

Persons who become liable because of starting a new business, profession or there is an increase in income must take registration within a period of 30 days. Penalty for not opting in can be Rs 50/- per day.

Registration (Section 6) – Who is required to register?

Employer	Application is made in form PSDT-1 and the registration is granted in form PSDT-3.
Self-employed	Application is made in form PSDT-2 and the registration is granted in form PSDT-4.

Documents required for registration

1. PAN/TAN
2. GSTIN
3. Address
4. Any additional address within Punjab
5. Email and Mobile No.
6. Authorized person who is responsible
7. Father name and designation
8. Total number of all employees in Punjab (Average number of employees last year)

Penalty and Due dates/Payment of Tax (Section 10)

The Punjab state development tax deducted from the salary of employees is to be deposited on a monthly basis i.e till the last date of the next month. Example – For depositing the tax of January the last date will be 28th February.

The other tax payers need to deposit tax annually till 13th April i.e. within 13 days from the year of completion.

Late payment will attract an interest of 2% for very month or 24% annually.

When an employer has purposely provided false information under this act, the designated officer may impose a penalty up to Rs 5000/- only.

If an employer or a enrolled person fails to pay the demand made by the designated officer, then a penalty of 50% of the tax amount can be added to the tax payable amount.

Filing of Returns (Section 7)

Employers need to furnish annual return in form PSDT-6 on or before 13th April of the following financial year accompanied by all the receipts of tax payments made during the year on monthly basis. The employees on the other hand are not required to file any return for professional tax.

The other tax payers shall furnish return in Form PSDT-7.

The method of payment shall be by challan made in Form PSDT-8.

The penalty for late filing can be imposed at RS 50/- per day.

Assessment under PSDT (Section 8,9)

Assessment by a designated officer can be done within 3 years and 6 years in some special cases from date of filing of return or due date whichever is later.

Any additional demand is to be paid within 15 days of such demand made by the designated officer.

TW Bonus Point ~

In case when a person is a director of a company and also is Karta in HUF, then the company will deduct PSDT as employer and director will pay development tax on HUF separately as well.

In case a person works under two employers, in order to avoid double taxation he must submit declaration in form PSDT-5 to one employer stating that his development tax is already being deducted by other employer.

For financial year 2018-2019 the tax liability of the month of April is Rs 80/- since PSDT act was implemented on 19th April, 2018. The annual liability would be of Rs 2280/- for financial year 2018-2019.

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Disclaimer – This blog post has been provided to you based on our study of different sources of web.

We don’t take responsibility of the credibility of any information or facts.

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