The Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975 (Profession Tax Act) applies to whole of State of Maharashtra and has come into operation from 1-4-1975. The Tax is levied and collected subject to the provisions of Article 276 of the Constitution of India for the benefit of the State.

Every person including limited liability partnership, registered under the Limited Liability Partnership Act, 2008 but excluding firms (whether registered under the Indian Partnership Act, 1932 or not) and Hindu Undivided family engaged actively or otherwise in any profession, trade, calling or employment and falling under one or the other of the classes mentioned in the second column of Schedule I shall be liable to pay to the State Government the tax at the rate mentioned against the class of such persons in the third column of the said Schedule:

The tax payable under this Act, by any person earning a salary or wage, shall be deducted by his employer from the salary or wage payable to such person, before such salary or wage is paid to him, and such employer shall, irrespective of whether such deduction has been made or not, when the salary or wage is paid to such persons, be liable to pay tax on behalf of all such persons.

Accordingly, every employer liable to pay tax on behalf of all persons earning a salary or wage, is required to take Registration known as "Profession Tax Registration Certificate" [PTRC] and other persons liable to pay profession tax is required to enroll self known as "Profession Tax Enrollment Certificate" [PTEC].

A) Liability of Employer to obtain Registration ‐ Every Emplyer who has employed even a single worker drawing salary more than the limits prescribed and liable to pay Profession Tax or any person from whom profession tax needs to be deducted under Section 4B, needs to apply for registration within 30 days from of his becoming liable to pay tax, electronically and obtain a Registration Certificate.

It is also important to note that the principal employer has no liability under the Profession Tax Act in respect of contact labour such as canteen employees, construction workers etc. engaged by regular contractors in factories or establishments. [ Circular dated 05-06-1976 ]

B) Liability of Salary or Wages earners to pay Profession Tax ‐ Every Salary and Wages earner whose monthly salaries and wages exceeds Rs.7,500/- in the case of men worker and exceeds Rs.25,000/- in the case of women worker is required to pay profession tax as per Entry 1 of Schedule I annexed to Profession Tax Act, other than the persons exempted from paying Profession Tax [ Refer below 'Persons exempted from paying Profession Tax' ].

C) Liability of Employer to pay Profession Tax in special cases ‐ Section 4B empower the Government to notify class of persons who should deduct and pay Profession Tax from the commission paid or payable. The Governent has issued Notification dated 19-04-2017 w.e.f. 01-04-2017 notifying Insurer registered under Insurance Regulatory and Development Authority of India Act, 1999 to deduct the amount of tax Rs.2,500/- as per Entry 1A of Schedule I from the commission payable to Chief Agents, Principal Agents, Insurance Agents and Surveyors and Loss Assessors registered or licensed under the Insurance Act, 1938 and pay the same on or before the last date of the month in which such deduction is made.

Similarly Section 4C empower the Government to notify class of persons who is eligible to receive any amount towards supply of goods or, as the case may be, supply of services or towards any other purposes, to collect an amount towards tax from an enrolled person or a person, liable to be enrolled. However, no notification is issued yet.

D) Meaning of Employee ‐ Section 2(ba) defines employee to mean a person employed on salary or wages and includes

• (i) a Government servant receiving pay from the revenues of the Central Government or any State Government or the Railway Fund;
• (ii) a person in the service of a body, whether incorporated or not, which is owned or controlled by the Central Government or any State Government, where the body operates in any part of the State, even though its headquarters may be outside the State;
• (iii) a person engaged in any employment of an employer, not covered by items (i) and (ii) above

E) Meaning of Salary or Wage ‐ Section 2(h) defines salary or wages to include pay or wages, dearness allowance and all other remunerations received by any person on regular basis, whether payable in cash or kind, and also includes perquisites and profits in lieu of salary, as defined in section 17 of the Income-tax Act, 1961, but does not include bonus in any form, and on any account or gratuity.
Circular dated 05-06-1976 has clarified that following items will be covered within the scope of Salary or wage viz.

• a) Overtime Allowance;
• b) Officiating Allowance;
• c) Honorarium;
• d) House Rent Allowance;
• e) Machine Allowance;
• f) Cash Allowance;
• g) Non-Private Practice Allowance paid to Medical Officers;
• h) Change Allowance;
• i) Night shift or Factory Allowance;
• j) Bhatta paid to outstations posted employees.

• a) Medical Aid Reimburesement;
• b) Encashment of Leave;
• c) Travelling Allowance;
• d) Conveyance Allowance;
• e) Washing Allowance;
• f) Stipend paid to trainees;
• g) Salary paid to Apprentice under the Apprentice Act;
• h) Leave Travel Assistance;
• i) Bonus paid to employees;
• j) Gratuity;
• k) Pension.

(F) Tax Payable working ‐ While calculating the tax payable by employee, actual amount salary received by him should be considered. The quantum of tax is related to the amount of salary actually received by the employee. For example, if employee is on without pay leave for half month, the tax will be payable as per the slab considering the actual salary paid for half month present.

When the arrears of salary, increment etc. is paid for prior period, they should not be considered to have been earned in the month in which it is paid, but they should be apportioned to the months to which it relates and tax payable for those month should be after apportionment will be payable and difference will be paid in the month in which it is actually paid.

(G) Restriction on prior un-registered period liability ‐ An employer, who has been granted certificate of registration on or after 01-04-2017, shall not be liable to pay tax for a period of more than four years from the end of the year immediately preceding the year in which the certificate of registration has been granted or the year in which the proceeding for registration is initiated against him, whichever is earlier.

(H) Penal Consequences ‐ (a) If an employer, liable to registration fails to apply for such certificate within the required time, the prescribed authority may, after giving him a reasonable opportunity of being heard, impose penalty of Rs.5/- for each day of delay in case of such employer.
(b) If an employer liable to registration has given false information in any application submitted, the prescribed authority may, after giving him a reasonable opportunity of being heard, impose a penalty equal to three times the tax payable under the Act.

(I) Liability of Person to obtain Enrollment ‐ Every Person including LLP registered under the LLP Act, 2008, excluding Partnership Firm whether registered or not under Indian Partnership Act, 1932 and HUF, engaged actively or otherwise in any profession, trade, calling or employment and covered by Schedule I appended to the Profession Tax Act, 1975 is liable to pay Tax at the rate mentioned against respective entry in Schedule I, needs to apply for enrollment within 30 days from of his becoming liable to pay tax, electronically and obtain a Enrollment Certificate.

Where a person is a citizen of India and is in employment of any diplomatic or consular office or trade commissioner of any foreign country situated in any part of the State, such person, if liable to pay tax, shall obtain a certificate of enrolment and pay the tax himself.

Where any person earning a salary or wage

• a) is also covered by one or more entries other than entry 1 in Schedule I and the rate of tax under any such other entry is more than the rate of tax under entry 1 in that Schedule, or
• b) is simultaneously engaged in employment of more than one employer,

(J) Meaning of Person ‐ Section 2(e) defines person to mean any person who is engaged actively or otherwise in any profession, trade, calling or employment in the State of Maharashtra, and includes a Hindu undivided family, 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.

Section 2(ca) defines engaged to mean "engaged", in relation to any profession, trade, calling or employment, means occupied fully or otherwise in such profession, trade, calling or employment, whether any pecuniary benefit or benefit of any nature whatsoever, actually accrues or not to a person from such occupation.

(K) Persons exempted from paying Profession Tax ‐ Section 27A provides for exemptions from payment of profession tax to

• a) person who have completed the age of 65 years before start of Financial Year;
• b) Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana of Directorate of Small Savings;
• c) any person with benchmark disability as defined in clause (r) of section 2 of the Rights of Persons with Disabilities Act, 2016;
• d) parents or guardians of a child with a benchmark disability,
• e) the badli workers in the textile industry;
• f) Armed members of Central Reserve Police Force to whom the Central Reserve Police Force Act, 1949 applies and armed members of the Border Security Force, to whom the Border Security Force Act, 1968 applies and serving in the State;
• g) Members of the Forces as defined in the Army Act, 1950 or the Air Force Act, 1950 and the members of Indian Navy as defined in the Navy Act, 1957 serving in any part of the State and drawing pay and 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 the State 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 (excluding persons drawing pay and allowances from the establishments of the Defence Ordnance Factories situated in any part of the State).

(L) Restriction on prior un-enrolled period liability ‐ Person who is liable to pay tax has remained un-enrolled; then, his liability to pay tax for the un-enrolled periods shall not exceed

• 4 years, in case where certificate of enrollment is granted on or after 01-04-2017,
• 8 years, in any other case, from the end of the year immediately preceding the year in which certificate of the enrollment has been granted, or the year in which the proceeding for enrollment is initiated against him, whichever is earlier.

(M) Penal Consequences ‐ (a) If a person, liable to get enrolled, fails to apply for certificate of enrolment within the period specified, he shall be liable to pay simple interest at the rate of 1.25%. per month or part thereof of the amount of tax payable, from the 1st July of that year, till the date of payment of such tax, in addition to the amount of tax payable in respect of the year, for which he has remained unenrolled.
(b) If a person liable to enrollment has given false information in any application submitted, the prescribed authority may, after giving him a reasonable opportunity of being heard, impose a penalty equal to three times the tax payable under the Act.