Article composed on: 28th February, 2019
HEMANT AGARWAL's Analysis on:
PROFESSION TAX on HOUSING SOCIETIES:
SUBJECT only to State of Maharashtra, under the "Profession Tax Act" and statutorily applicable without any exceptions to ALL "Cooperative Housing Societies", registered under the "Maharashtra Cooperative Societies Act”.
WHO IS LIABLE:
01. EACH & EVERY Housing Society (CHS), registered under the "Maharashtra Cooperative Societies Act", are statutorily & mandatorily bound to pay "Profession Tax", for itself (CHS), and for its employees, under the provisions of “MAHARASHTRA STATE TAX ON PROFESSIONS, TRADES, CALLINGS AND EMPLOYMENTS ACTS, 1975” (in short: Profession Tax Act).
a) There is no exemption for any CHS to escape from this statutory & mandatory liability, irrespective of whether it is a small or big CHS.
b) The liability of an CHS, begins from the date of its Society Registration Certificate. e.g. "IF" the CHS was registered in 1977, THEN the liability to pay Profession Tax, starts from 1977. IF CHS has not paid Profession Tax from 1977 till date, THEN CHS has to pay Profession Tax and Penalty and Interest from 1977 till date of making payment. However, after amendment to the Act, w.e.f. May-2012, this has now been limited to previous Eight years only.
c) Scores of CHS have innocently /conveniently, not registered themselves under the Profession Tax Act and are not paying Profession Tax to the Govt.
Download (Payable) COMPLAINT APPLICATION to PROFESSION TAX AUTHORITY.
Complaint to Profession Tax Authority, against Society Committee, for Violation and Non-Compliance of Profession Tax Act. https://chshelpforum.com/doc-0016
CHS IS LIABLE FOR PROFESSION TAX:
02. Under Section 2(e), a "person" means a "ANY Society" and Under Section 3 of the Profession Tax Act, all “cooperative societies” are covered /liable to pay Profession Tax.
a) CHS are liable to pay Rs. 750/- per annum, as “Profession Tax” for the Society (as an entity), as is defined under sr. no. 16(v) of Schedule I, u/s 3 of the Profession Tax Act.
ONLINE ENROLMENT & FILING RETURNS:
03. Govt. has now provided facility for E-Enrolment and E-Return filing and E-Payment, via its website: www.mahavat.gov.in / www.mahagst.gov.in (provided it works !!!!).
REGISTRATION & ENROLMENT CERTIFICATES:
04. CHS, is under “statutory & mandatory” liability to obtain the following:
a) REGISTRATION CERTIFICATE, u/s 5(1) r/w Rule 3, for deducting Profession Tax, from its Employees
b) ENROLMENT CERTIFICATE, u/s 5(2) r/w Rule 4, for paying Profession Tax, on the Society, as a Legal Entity .AND. for deducting Profession Tax from its employees.
c) CHS becomes liable to pay Penalty for not obtaining BOTH the above Certificates.
d) BOTH the above Certificates, must be displayed in the Society office, under Rule 8.
e) CHS is statutorily liable to file "Returns" of the Profession Tax deducted and deposited.
f) CHS becomes liable to pay Penalty for not "Filing Returns".
LIABLE TO DEDUCT PROFESSION TAX:
05. U/s 4, a CHS, is statutorily liable to deduct "Profession Tax" from its employees (as defined in the "enrollment certificate"), who earn above Rs. 7500/- per month basis (as from 01-07-2014) and deposit it in the Govt. Treasury. IF the CHS does not do this, THEN the CHS becomes liable for Penalty & Interest thereon.
|Monthly Salary||Rate of Profession Tax|
|Rs. 0 – 7,500||NIL|
|Rs. 7,501 - 10,000||Rs. 175/- Per Month|
|Above Rs. 10,000||Rs. 200/- Per Month(Rs.300/- for Feb)|
MAINTAINING PROFESSION TAX REGISTER:
06. CHS is statutorily liable to maintain a Register of "ALL" its Employees, recording therein the Salary amounts and the deducted Profession Taxes under the parameters of Section 16 & 18. Under Rule 19 & 19A, this "Profession Tax Register" data should be continuously & consistently maintained from previous Six years, till the current Financial Years.
a) The Profession Tax authority, can inspect or call for the "Profession Tax Register", to determine the number of employees and the relevant Taxes paid and/or to levy Interest /Penalty etc....
b) The Profession Tax authority, can seize the related Books, Accounts & Registers, for determining various violations of the Profession Tax laws.
EXEMPTIONS for DISABILITIES, MENTAL RETARDATION, SENIOR CITIZENS:
07. Despite being a "person" (read "juristic person"), a CHS will NOT be able to claim any Profession Tax exemptions under the parameters of section 32, for any "Permanent physical disabilities .OR. mental retardation .OR. blindness .OR. deaf /dumb" .OR. on any other reason, whatsoever.
a) However, a employee of the CHS, can claim exemption from paying Profession Tax, for the aforementioned reasons, subject to applicability & proper certificate issued by a Govt. Hospital.
b) Persons who have attained 65 years of age, are fully exempt from paying Profession Tax, under the provision of section 27(f).
INTEREST /PENALTY PAID BY CHS:
08. "ANY" Interest or Penalty or Late Fee, on Profession Tax, paid by CHS, shall be termed as "negligence, omission & detrimental to the interest of the CHS" under the provision of Section 73(1AB) r/w section 146 & 147, of the MCS Act. The CHS Mg.Committee becomes liable and will have to reimburse the "Levied Interest /Penalty /Late Fee" back to the CHS, from their personal pockets and in further default, becomes liable for multiple prosecutions under various other laws.
BALANCE SHEET of CHS:
09. CHS has to separately reflect the CHS component of "Profession Tax" payment, under a separate account head, in its Balance Sheet, and set-off this expenditure-payment against its Profit & Loss Accounts. CHS has to recover "Profession Tax" paid on CHS (750/-), equally from its Members, via a proper yearly Budget Projection statement, each financial year.
10. Sometimes, the Govt., announces "Amnesty Schemes" for the defaulters to pay their pending Profession Taxes and regularize the same. Usually, this is done without any Penalty /Interest /Fees etc....
a) Apprehensively, by announcing "Amnesty Schemes", the Govt., provides a opportunity to the Employer /Employees to clean up their defaults, where, in turn the Govt. stands to gain revenue.
b) Apprehensively, the Govt., helplessly announces "Amnesty Schemes", since presently the Profession Tax Act has no provision for criminal prosecution /imprisonment etc....
The Government's objective for levy of "Profession Tax", was to generate a continuous & consistent source of revenue for implementing "welfare schemes" for the overall growth and development of the State.
HOWEVER, CONTRARY to the State Government's objectives, “MILLIONS" of Cooperative Societies in Maharashtra are not paying "Profession Tax", for itself and are not deducting Profession Tax from their Employees. The Maharashtra State is losing several Crores of rupees, every year, by way of loss to the State exchequer, for failing to recover “Profession Tax” from Cooperative Societies and such losses get further aggravated by Govt. announced "amnesty schemes". The State Government Departments have not taken cognizance of this, resulting /causing a loss to the prudent tax paying citizens.
AUTHOR: Hemant Agarwal