Professional Tax Registration in Nagaland

Overview

Professional tax is a kind of direct tax which is levied by the state government, and it applies to salaried professionals. This tax is regulated by state law specifically by the Nagaland Professions, Trades, Callings, and Employments Taxation Act 1968. In Nagaland, the state government levies this tax on salaried employees, professionals such as lawyers, doctors, and chartered accountants, as well as businesses based within the state.

The state levies this tax to raise funds for local governments to construct roads, hospitals, and community facilities. This tax is collected by the employers from their employees and paid to the government. These types of obligations are compulsory for persons carrying on a business who must file, pay, and deliver the tax electronically.

Benefits

• Legal Compliance: By registering and paying professional tax, individuals and businesses can comply with Nagaland's tax laws, which may help them avoid legal repercussions and penalties.
• Local Bodies: Local bodies utilize the funds collected as professional tax to benefit citizens by spending on infrastructure development and undertaking state-assigned responsibilities in public healthcare, educational systems.
• Tax Deductibility: Taxes paid during the year can be deducted from income tax to reduce income tax liability.
• Supporting Social Welfare Schemes: To fund social welfare schemes that benefit Nagaland's citizens, the state uses professional tax revenue.
• Improved Public Services: By contributing to the state's revenues, taxpayers help facilitate better governance and the development of essential services like public transportation, healthcare, and education.

Procedure

In Nagaland, you have the option to register for professional tax either manually or online through the official sales tax portal. Here's how the process operates. Here, we break it down step-by-step to guide you through the registration.

1. Step 1: Determine Applicability - Determine whether you fall into the professional tax category. If you have salaried income, your company will take care of your tax registration and payment. But if you are self-employed or running a business, then it is your duty to register.
2. Step 2: Obtain the Application Form - Applicants will also get the professional tax registration application form directly from the local office of the Tax Department, Nagaland, for offline processing. Visit the official page of the Department of Taxation Nagaland for online registration and download or fill out the form strictly in online mode only.
3. Step 3: Submit the Required Documents - You must complete the form online, filling in all the necessary details and submitting it to the tax office along with some attachments through the provided link (you will learn about it in the upcoming paragraphs). Alternatively, you can apply online for specific application methods.
4. Step 4: Verification - The authorities will review and approve the submitted documents. Then you submit the application and documents. They will verify your form; if it is perfect, surely they will approve your registration. After that, you get a Professional Tax Registration Certificate (PTRC) for an employer or a Professional Tax Enrollment Certificate (PTEC) if you are self-employed.
5. Step 5: Pay the Professional Tax - Every month, starting from the month you receive your certificate, you must pay this tax, which is determined by your income slab. You will have to withhold the tax from employee salaries and then pay it to the government.

Professional Tax Slabs in Nagaland

The table below shows how much professional tax one has to pay based on monthly income:

Documents Required

When registering for Professional Tax in Nagaland, you need to submit the following documents:

For Employers:

• Company registration certificate or trade license
• PAN Card of the company
• Details of employees, including PAN and salary information
• Bank account details of the company
• Address proof of the business establishment

For Self-Employed/Professionals:

• PAN Card
• Proof of identity (Aadhaar Card, Voter ID, etc.)
• Address proof (utility bills, rental agreement, etc.)
• Details of the profession or trade license (if applicable)
• Bank account information

Frequently Asked Questions (FAQs)

Q1. Who is liable to pay professional tax in Nagaland?

Professional tax is applicable to every person in Nagaland whose income falls under the salary, profession, trade, or business category. Professionals of all kinds, salaried, self-employed, doctors and lawyers, and business owners.

Q2. Is it possible to claim a professional tax deduction on my income tax return?

Yes, professional tax paid is a deduction from your gross income under Section 16 of the Income Tax Act.

Q3. What are the penalties for non-payment of professional tax?

Failing with regard to paying the professional tax on time can lead to penalties. Other states, like Nagaland, may impose a lump sum penalty or divide it into slabs according to the delay.

Q4. How is professional tax different from income tax?

The central government deducts income tax from your total salary at different rates depending on your income slab, while the state government applies a fixed rate tax based on your slab.