This blog is written by Mr. Habib Ullah Khan. Please read this blog and provide your valued comments
Professional Tax is implemented under the Finance Act 1977. It is a tax levied and collected with respect to earning or income from any profession, trade, calling or employment for each financial year in addition to any tax, rate, duty or fee that may be payable under any other law.
History of Professional Tax
It was properly levied in 1964 as PKR. 30/- for every Profession, Trade, Calling and Employment under Punjab Finance Act, 1964 but it was made a proper shape under the Punjab Finance Act, 1977 and 6 different categories were defined first time. The maximum limit of the levy-able tax was PKR. 5000/-. But the latest position of the said tax was finalized in 1999 as follows:
- The amendment in the Limitation Act, 1941 made by Federal Parliament, vide section 2 of the Federal Finance Act, 1999, the amendment made in the second schedule to the Punjab Finance Act,1977 vide section 6 of the Punjab Finance Act, 1977 had become redundant. Therefore, the Government of Punjab had stopped making assessment and recovery of professional tax once levied on the basis of payable income tax at the rate of 1% under the provision of section 6 of the Punjab Finance Act, 1977 and had reverted back to the previous schedule forming the basis of assessment of professional tax in accordance with the amendment made by the Federal Parliament in the Limitation Act of 1941 vide section 2 of the Federal Finance Act of 1999 and subsequent enactment to this effect from 01.07.1977 instead of 01.07.1999 by the Punjab Government in complete adherence to the provision of section 4 of the Federal Finance Act, 2006.
- Under Article 163 of the constitution of 1973, Tax on professions, trade, callings or employment is a provincial levy. Therefore, all functional establishments/units of the registered in business/professional activities in the province of Punjab are liable to be assessed to professional Tax under Section 3 of the Punjab Finance Act, 1977 and the second schedule made there under. In this context it is further submitted that vide section 4 of the Federal Finance Act of 2006 the Federal parliament has given effect to the said amendment in the Limitation Act of 1941 from 01.07.1977 instead of 01.07.1999. Therefore, the charge of professional tax up to the limit of PKR. 100,000/- in respect of assesses has been lawfully held valid with effect from 01.07.1977.
STEP – 1:
It can be initiated by two methods which are:
- Applicant visits Excise & Taxation Department for the payment of concerned tax.
- Deputed official inspects the offices in different areas of Islamabad and deliver notices to tax defaulters.
STEP – 2:
Following documents are submitted by the applicant:
- Applicationto ETO on office Letter pad.
- Copy of CNICof tax payer.
- National Tax Number(NTN)
- Proof of SECP Registration/Registration in Registrar Office/Any authorized Registration.
- Leasing Agreementof the Office.
- Monthly Salary Sheetof the employees / Staff.
- Income Tax(IT) and Sales Tax (ST) returns of current/previous year.
- Deposited Fee Challan.
STEP – 3:
Tax amount should be deposited in State Bank of Pakistan (SBP), Islamabad / National Bank of Pakistan (NBP), E&TD branch, Islamabad in Account No: B01601. The rate of the professional tax is mentioned below:
- REVISED PROFESSIONAL TAX RATES:
|S. No.:||Categories||Fee Amounts (Rs.)/annum in ICT|
|1.||Companies registered under the Companies Act 2017 having:|
|a.||Capital upto PKR 5 million but not exceeding PKR 10 million||7,000/-|
|b.||Capital exceeding PKR 10 million but not exceeding PKR 50 million||18,000/-|
|c.||Capital exceeding PKR 50 million but not exceeding PKR 100 million||35,000/-|
|d.||Capital exceeding PKR 100 million but not exceeding PKR 200 million||80,000/-|
|e.||Capital exceeding PKR 200 million||90,000/-|
|f.||Employees not exceeding 10||1,000/-|
|g.||Employees exceeding 10 but not exceeding 25||2,000/-|
|h.||Employees exceeding 25||5,000/-|
|3.||Members of Stock Exchanges||5,000/-|
|6.||Motor Car Dealers & Real Estate Agents||10,000/-|
|7.||Health Clubs, Gymnasiums & Others||5,000/-|
|9.||Jewelers, Departmental Stores, Electronics Goods Stores, Cable Operators, Printing Press and Pesticide Dealers||1,000/-|
|10.||Tobacco Vendors – Wholesalers||2,000/-|
|11.||Medical Consultants or Specialists and dental surgeons||5,000/-|
|12.||Registered Medical Practitioners||2,000/-|
STEP – 4:
In return, Professional tax Certificate will be issued, which is dually signed by concerned official and Excise and Taxation Officer.
STEP – 5:
The Professional Tax Certificate is renewed in the month of July of every year and procedural requirements of the Certificate renewal is as under:
- Applicationfor Renewal on authentic letter pad.
- Copy of last paid Certificate.
- Paid Challanof the due tax amount.
Habib Ullah Khan
October 28, 2020
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