Professional Tax Registration in Sikkim

Overview

The professional tax applies to people who earn an income from a salary, profession, or business in Sikkim. Levied under the Sikkim Tax on Professions, Trades, Callings, and Employments Act, 2006 this tax is one of the primary revenues for the state. This tax ruling affects all employers and self-employed individuals.

It is the obligation of the employers to deduct, and remit to respective state governments. The tax is payable by professionals and self-employed people like advocates, Doctors, and Consultants instead of their incomes.

Tax slabs are different according to income and any person or business working in Sikkim has to pay this tax by registration regularly, which prevents penalties.

Benefits

• Legal Compliance: Professional tax registration safeguards the individual and business from breaking the tax laws in Sikkim and thereby saves them from penalties.
• Hassle-Free Tax Deduction: Instead of recovering the professional tax directly from the employees, employers can retain and deduct the same amount from employees' salaries without causing any inconvenience to them.
• State Revenue: It is also one of the means through which the state government collects revenue to fund projects aimed at public welfare and infrastructure.
• Tax Deduction Benefit: The professional tax that one pays is deductible from the individual's Income thereby giving an additional relief to taxpayers.
• Smooth Business Operations: Proper registration and timely payments ensure smooth functioning of businesses, free from legal or financial troubles.

Procedure

1. Filing the Application: The applicant (either an employer or a self-employed individual) must file a professional tax registration application either online via the Sikkim Commercial Tax Department's portal or at a local tax office. Separate applications are required for employers and individual professionals.
2. Submission of Documents: The applicant needs to submit documents proving their business, identity, and income. Documents such as proof of income, registration certificates, and PAN are typically required.
3. Verification by Authorities: The documents are scrutinized by the tax authorities. If all details are found to be correct, the registration is processed.
4. Issuance of Registration Certificate: Upon successful verification, the professional tax registration certificate is issued. For employers, a code is provided to deduct tax from employees' salaries.
5. Regular Payment: Registered individuals and businesses are required to pay professional tax periodically, either monthly or annually, depending on the income slab.
6. Filing Returns: Returns must be filed regularly, generally on a quarterly basis. These returns must reflect the total tax deducted or paid and submitted to the Commercial Tax Department.

Professional Tax Slabs in Sikkim

The table below shows the amount of professional tax one must pay based on their monthly income:

Documents

The documents required for professional tax registration in Sikkim include:

• PAN Card: For both individuals and businesses.
• Proof of Business Registration: Incorporation certificate, partnership deed, or business license.
• Identity Proof: Aadhaar card, voter ID, or passport.
• Income Proof: For salaried individuals, salary slips; for self-employed professionals, income statements or certificates.
• Address Proof: Utility bills, rent agreement, or property ownership documents.
• Bank Account Details: Proof of the bank account used for business or salary transactions.

FAQs

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

Any individual earning an income through salary, trade, or profession within the state of Sikkim is liable to pay professional tax. This includes both salaried employees and self-employed professionals.

Q2. How often is professional tax paid in Sikkim?

Professional tax in Sikkim is typically paid monthly. Employers must deduct and remit the tax on behalf of their employees, while self-employed professionals pay it directly based on their earnings.

Q3. What happens if professional tax is not paid on time?

Delayed professional tax payment is subject to both interest and a fine. This can lead to further actions, for instance, legal proceedings, fines or even closure of enterprises.

Q4. Can I claim a deduction for professional tax while filing my income tax returns?

Yes, the professional tax paid during the financial year can be claimed as a deduction from gross income under Section 16 of the Income Tax Act.

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