Andhra Pradesh Professional Tax Rules: Applicability & Payment

Every employee and individual involved in any type of employment must pay professional tax in Andhra Pradesh. The tax has to be collected and remitted to the state government either by the business owner or by the individual worker. Similar to the income tax levied by the central government, professional tax is mandatory.

In this article, we will provide a comprehensive overview of the applicability, rules, deduction cycle, and payment methods of professional tax in Andhra Pradesh. Additionally, we will equip you with the necessary tools to ensure compliance with the act.
 

Professional tax in Andhra Pradesh

The Andhra Pradesh professional tax is levied on all employees, freelancers, and individuals earning a livelihood through any type of work within the state. This tax is calculated based on an individual's income with the maximum amount payable being ₹2,500 per year.

Employers are responsible for calculating the tax amount for their employees based on the slab rates applicable to them, deducting the respective amount from their salaries, and remitting it to the Commercial Taxes Department of Andhra Pradesh. If you are self-employed, you must calculate your tax liability and ensure timely payment to the government.

The collected professional tax serves as a source of revenue for the state and is utilized to develop the state's infrastructure.

Applicability of professional tax in Andhra Pradesh

The professional tax applies to the following individuals and entities in the state of Andhra Pradesh.

• Individuals: Any person who earns a living through employment, including salaried employees, professionals, and contract workers.
• Freelancers: Any person who offers their services or skills to clients without being tied to a specific employer.
• Self-employed individuals: Individuals such as sole proprietors and independent professionals who run their own businesses and generate income.
• Salaried employees: All employees working in an organization, whether in the private or government sector.
• Employers: Entities that hire employees and have the responsibility of deducting and remitting professional tax on behalf of their employees.
• Businesses: All organizations involved in any type of commercial activity.

Registering your business for professional tax in Andhra Pradesh

Every employer and person, other than salaried employees, who is liable to pay professional tax, must obtain a registration certificate from the government of Andhra Pradesh within 30 days of becoming liable to pay tax.

This can be achieved by either filing Form 1, Application for registration for employers, or Form 2, Application for registration for persons other than employees, and submitting it to the assessing authority.

Additionally, you can apply for e-registration through Andhra Pradesh's My Profession Tax website. Here are the steps involved:

1. Visit the official website of the state government's commercial tax department, My Profession Tax.
2. Click on the e-Registration option located under the e-Services tab on the homepage.
3. Next, the professional tax registration page will open. If you are registered with the VAT/GST Act, select Yes and proceed.
4. Enter your GSTIN or VAT number in the respective fields and provide your mobile number for OTP verification.
5. Once your mobile number is verified, the application page will open. Fill in all the required information and upload the necessary documents on the page.
6. After completing the form, click Submit to confirm your submission. Remember to make a note of your application reference number for future reference.

If you have any other branches operating in Andhra Pradesh, you must follow the above steps and register each branch for professional tax.

For more information, take a look at the user guide for professional tax registration released by the Commercial Taxes Department of Andhra Pradesh.

Andhra Pradesh professional tax slab rates

In Andhra Pradesh, professional tax must be deducted monthly. For salaried employees, the employer is responsible for calculating the tax liability by considering the employee's monthly salary and the applicable slab rates.

Professional tax rates for all categories of profession in Andhra Pradesh

For certain professions in Andhra Pradesh, the deduction cycle is yearly. Refer to the table below for slab rates applicable to your business.

For additional information on tax rates for various professions, you can refer to the bare act available here.

How to pay professional tax in Andhra Pradesh

Once you determine your employees' professional tax liability, you need to deduct the amount before processing their salaries each month and remit it to the government. To pay the amount, you have the option to submit either Form I or Form II as part of the return process.

Form I, or the monthly tax return form, can be used when you are filing professional tax returns for that month, whereas Form II should be used when you are filing returns for that fiscal year.

Due date to pay professional tax

The due date for paying professional tax depends on when you enrolled with the Act.

If you enrolled before the start of a year or by May 31st of that year, the tax should be paid before June 30th. For those who enrolled after May 31st, the tax must be paid within one month from the date of enrollment each year.

Andhra Pradesh professional tax late payment penalty

If someone fails to follow the rules of the Act without a valid reason, they can be fined. The amount of the fine can range from at least 500 rupees to a maximum of 5,000 rupees. If the offense continues over a period of time, there can be an additional fine of at least 10 rupees and up to a maximum of 50 rupees per day until the offense is resolved.

Andhra Pradesh professional tax exemption

The state of Andhra Pradesh provides full exemption from paying professional tax to the following individuals:

• Salaried employees earning below ₹15,000 per month.
• Individuals with a disability of 40% or more, regardless of the type of disability.
• Agriculturists and individuals engaged in performing religious duties.
• Skilled professionals such as goldsmiths, blacksmiths, potters, carpenters, barbers, plumbers, and electricians.

Compliance forms for Andhra Pradesh professional tax