Professional Tax in Maharashtra: What Every Employer Must Know
Professional tax is a state levy, and in Maharashtra it catches almost every business with employees. It is small in rupee terms and easy to overlook, which is exactly why it turns up in so many notices.
Two registrations, two different purposes
The distinction confuses people more than anything else:
- PTEC (Professional Tax Enrolment Certificate) covers the tax the business or professional pays on its own account. A proprietor, partner, company or LLP needs this.
- PTRC (Professional Tax Registration Certificate) covers tax you deduct from employees' salaries and pay to the state.
An employer with staff generally needs both. A sole practitioner with no employees typically needs only PTEC.
How the employee deduction works
Professional tax is deducted from salary on a slab basis linked to monthly wages, and the amount is capped at ₹2,500 per person per year across all states. Deduct it at source each month and deposit it — the liability is the employer's, so failing to deduct does not shift the burden to the employee.
Women employees below a specified salary threshold and certain categories, including some persons with disabilities, are exempt. Applying those exemptions correctly is worth doing; it is also worth documenting why you applied them.
Filing frequency
PTRC returns are filed monthly or annually depending on your previous year's liability. Cross the prescribed threshold and you move to monthly filing for the following year — a change that catches out businesses that grew and never revisited their filing cycle. PTEC is an annual payment.
Because the frequency can change year to year, it is worth confirming your applicable cycle at the start of each financial year rather than assuming last year's pattern still holds.
Where employers get caught
- Registering late. Registration is due within a short window of becoming liable, and the department calculates interest from the date liability arose, not the date you noticed.
- Deducting but not depositing. This attracts interest and penalty, and it is treated far more seriously than an honest under-deduction.
- Ignoring it for directors. A director drawing remuneration is generally covered.
- Forgetting branches. Separate places of business can require separate handling.
Keeping it clean
Professional tax is genuinely low-effort once set up properly: a payroll register that applies the right slab, a calendar reminder for the payment date, and an annual check that your filing frequency has not changed. The cost of neglect is disproportionate to the tax itself — interest and penalties on a few thousand rupees of tax can run for years before anyone notices.
Need help with PTEC/PTRC registration, arrears or ongoing filings? Talk to Kunal P Shah & Co — we manage professional tax compliance for employers across Maharashtra.