Professional Tax

Introduction to Professional Tax

The Professional Tax is administered under the provisions of The Punjab Finance Act 1977 and the Punjab Professions and Trade Tax Rules 1977. This tax is levied and collected on/from the persons or class of persons engaged in a profession, trade, calling or employment in the Province of the Punjab and it shall come into force on and from the first day of July under section 1 (3) of the Punjab Finance Act, 1977.

History of Professional Tax

It was properly levied in 1964 as PKR. 30/- for every Profession, Trade, Calling and Employment under Punjab Finance Act, 1964 but it was made a proper shape under the Punjab Finance Act, 1977 and 6 different categories were defined first time. The maximum limit of the levy-able tax was PKR. 5000/-. But the latest position of the said tax was finalized in 1999 as follows:

The amendment in the Limitation Act, 1941 made by Federal Parliament, vide section 2 of the Federal Finance Act, 1999, the amendment made in the second schedule to the Punjab Finance Act,1977  vide section 6 of the Punjab Finance Act, 1977 had become redundant. Therefore, the Government of Punjab had stopped making assessment and recovery of professional tax once levied on the basis of payable income tax at the rate of 1% under the provision of section 6 of the Punjab Finance Act, 1977 and had reverted back to the previous schedule forming the basis of assessment of professional tax in accordance with the amendment made by the Federal Parliament in the Limitation Act of 1941 vide section 2 of the Federal Finance Act of 1999 and subsequent enactment to this effect from 01.07.1977 instead of 01.07.1999 by the Punjab Government in complete adherence to the provision of section 4 of the Federal Finance Act, 2006. Under Article 163 of the constitution of 1973, Tax on professions, trade, callings or employment is a provincial levy. Therefore all functional establishments/units of the registered in business/professional activities in the province of Punjab are liable to be assessed to professional Tax under Section 3 of the Punjab Finance Act, 1977 and the second schedule made there under. In this context it is further submitted that vide section 4 of the Federal Finance Act of 2006 the Federal parliament has given effect to the said amendment in the Limitation Act of 1941 from 01.07.1977 instead of 01.07.1999. Therefore, the charge of professional tax upto the limit of PKR. 100,000/- in respect of assesses has been lawfully held valid with effect from 01.07.1977.

Steps for in case of Compterize Approach to ETO Professional Tax

Steps for Self-Assessment

  • Please click the given Link
  • Fill in the Form and Click on Print Button
  • Take 3 copies of print and deposit into any NBP/SBP branch

Click Here for Online Professional Tax Self-Assessment

Manual Approach to ETO Professional Tax

ETO Professional Tax issues Demand/Enrollment No. to the Applicant on same day by adopting following steps

Submit basic information regarding your business and date of its commencement OR Registration Date with any authority along with the followings:

  • ETO Professional Tax will issue a Payment Challan (PFT-2) on 32-A accordingly
  • Deposit Professional Tax in any branch of NBP/SBP in Punjab
  • Provide a copy of Paid Challan to ETO Professional Tax

Clearance Certificate Of Professional Tax

  • Application from proprietor in plain paper.
  • Copy of CNIC of the applicant
  • Proof of payment of Professional Tax up-to-date

Modes of Professional Tax

Assessment Criteria of all the heads of Professional Tax are assessed under the following criteria:

Companies   On Paid Up Capital
Factories   On Numbers of Employees 
Commercial Establishments On Number of Employees except retailers and Whole sellers
Importers and Exporters On the Value of Goods Imported or Exported
Government Contractors On the Value of Services Given
Government Property Developers On the Value of Contract
Service Providers Fixed

Companies registered under Companies Ordinance, 1984 with paid up capital

Class of Persons    Rate of Tax Per annum
 
Up to PKR 5 million   PKR. 5000/-
Exceeding PKR 5 million but not exceeding PKR 50 million PKR. 20,000/-
Exceeding PKR 50 million but not exceeding PKR 100 million PKR. 50,000/-
Exceeding PKR 100 million but not exceeding PKR 200 million PKR. 75,000/-
Exceeding PKR 200 million PKR. 1,00,000/-

Persons other than companies, owning factories as defined under the Factories Act, 1932

Class of Company   Rate of Tax Per annum
     
Employees not exceeding 10 PKR. 1000/-
Employees exceeding 10 but not exceeding 25 PKR. 2000/-
Employees exceeding 25 PKR. 5000/-
   

Persons other than companies owning commercial establishments having 10 or more employees 

Class of Persons   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporation limits PKR. 3000/-
Others PKR. 2000/-
All other commercial establishments other than wholesalers and retailers PKR. 1000/-
   

Persons engaged in the import or export of goods who, during the preceding financial year, imported or exported goods of the value

Class of Persons    Rate of Tax Per annum
     
Exceeding PKR 1 lac but not exceeding PKR 1 million PKR. 2000/-
Exceeding PKR 1 million but not exceeding PKR 5 million PKR. 3000/-
Exceeding PKR 5 million PKR. 5000/-
   

Persons who are engaged in a profession, trade, calling or employment either wholly or partly within the Province of the Punjab, who were assessed to pay income tax during the preceding financial year PKR. 200/-
 
Contractors, builders and property developers. who during the preceding financial year supplied to the Federal or the Provincial Government or a company or a factory or a commercial establishment or an autonomous or a semi autonomous organization or any Local Authority; goods, commodities and services of the value

Class of Persons    Rate of Tax Per annum
     
Not exceeding PKR 1 million PKR. 500/-
Exceeding PKR 1 million but not exceeding PKR 10 million PKR. 3000/-
Exceeding PKR 10 million but not exceeding PKR 50 million PKR. 5000/-
Exceeding PKR 50 million PKR. 10,000/-
   

Persons engaged in various professions and providing different services

Class of Persons    Rate of Tax Per annum
     
Medical consultants or specialists/dental surgeons PKR. 1000/-
Registered medical practitioners PKR. 1000/-
Others including Homeopaths, Hakeems and Ayuervedics PKR. 1000/-
Within Metropolitan and Municipal Corporation limits PKR.  500/-
Others Auditing firms (per professionally qualified persons)  
  • Within Metropolitan and Municipal Corporation limits
PKR. 3000/-
  • Others 
PKR. 2000/-
   

Management and Tax Consultants Architects, Engineering, Technical and Scientific Consultants

Class of Persons   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporations limit PKR. 3000/-
Others    PKR. 2000/-  
Lawyers PKR. 1000/-
Members of Stock Exchanges PKR. 5000/- 
   

Money changers

Class of Company   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporation limits PKR. 3000/- 
Others  PKR, 1000/-
   

 Motor Cycle/Scooter dealers 

Class of Company   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporation limits PKR. 5000/-
Others  PKR. 3000/-
   

Motor Car Dealers and Real Estate Agents

Class of Company   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporation limits PKR. 10,000/-
Others  PKR. 5000/-
   

Recruiting Agents      

Class of Company   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporation limits PKR. 10,000/-
Others  PKR. 5000/-

Carriage of Goods and Passengers by Road     

Class of Company   Rate of Tax Per annum
     
Within Metropolitan and municipal Corporation limits PKR. 2000/-
Others  PKR. 1000/-
   

Health Clubs, Gymnasiums & Others  

Class of Company   Rate of Tax Per annum
     
Within Metropolitan and Municipal Corporation Limits PKR. 2000/-
Others  PKR. 1000/- 
Jewellers, Departmental Stores, Electronic Goods Stores, Cable Operators, Printing Presses and Pesticide Dealers PKR. 1000/-
Tobacco Vendors - Wholesalers PKR.  2000/-
   

Taxing from a person engaged more than one profession

If a person is engaged in more than one profession, trade calling or employment he shall pay the tax only in respect of one such profession, trade, calling or employment for which rate of tax is the highest under section 3 (2) of Punjab Finance Act 1977. 

Procedure of Survey

Most of the survey was made by personal visits to the allotted circles by the Inspector, which is conventional but most authentic source of survey and still in use because of movability of the units time to time. But new ways were adopted during the last couple of years.

  • Directory of Industrial Establishments Punjab
  • Yellow Pages
  • SECP List of registered companies
  • List from Chamber of Commerce
  • Lists from Educational Departments etc.
  • Serving of Notices

Enlisted below are the 3 types of initial notices are served to assessees:

First Notice

Following information and documents are demanded from the assessee for the assessment of tax under section 3 of Punjab Finance Act 1977 amended in 1999 and 2000 within the mention period

  • Date of opening of the office with documentary evidence
  • Photo copy of incorporation certificate if it is an incorporated company
  • Paid-up capital of the company with documentary evidence i.e. form "A" acknowledged by SECP
  • Value of import/export during the years to be taxed with documentary evidence (P-Copy of Income Tax returns for the said years)
  • Year wise value of work done/Services/Supplied goods to the Federal/Provincial/Semi Government department or a company or a Factory or a commercial establishment or an autonomous or semi autonomous or semi autonomous organization or any local authority, with documentary evidence
  • Number of employees
  • Ist and last income tax returns acknowledge by Income Tax Department
  • Professional Tax receipts if paid any during last years

Second Notice

Reminder of the first notice, on the expiration of stipulated period.

Third Notice

Reminder of the above two notices and final opportunity is given to the assessee to be heard. Some Special Notices are also served

Final Call Notice 

Ex-Parte Decision, The section 4 (2) of Punjab Profession & Trade Tax Rules 1977 give the Assessing Authority District Excise & Taxation Officer ability to decide the matter exparte on maximum taxation with 100% penalty.

Demand Notice

Demand notice is issued against those assessees who are already assessed or decided exparte with the 32-A Challan form, within the period not less than 30 days after serving the notice under section 6 of the Punjab Professions & Trade Tax Rules 1977. If assessee does not make any action for the payment of assessed tax following procedure is adopted under Land Revenue Act, 1967, vide the Section 6 of Punjab Finance Act 1977. Notice before Arrest Warrants or Attachment Under section 81/82 of the Punjab Land Revenue Act, 1967.

Arrest Warrants  

Attachment orders Under Punjab Land Revenue Act, 1967

Appeal in Case of Objection

If assesse has any objection about the assessment, he has right to appeal before Director Excise & Taxation under section 4 (3) of Punjab Profession & Trade Tax Rules, 1977 within 30 days and the Appellate Authority can order to charge the whole tax or to refund.

Demand Register

All the assessed units are written in the Demand Register, in which all the paid amounts as well as arrears are maintained as record under section 11 of the Punjab Professions & Trade Tax Rules, 1977 in Form P.F.T-3.

Taxing Year

Taxing year is from 1st July to 30th June (Fiscal Year), under section 1 (3) of the Punjab Finance Act, 1977.

Payment Duration

Every person liable to pay the tax shall before the 31st day of August, in each calendar year, furnish to the District and Taxation Officer a statement giving his name, address, nature of his profession, trade calling or employment.

Crediting of Amount

Every person shall credit the amount of the tax in the nearest treasury in Form P.R.T-2 or send the same to District Excise and Taxation Officer by postal order by a cheque on the State Bank of Pakistan, National Bank of Pakistan or any other bank having clearing accounts with either of these banks.

Deleting of Demand

If any person liable to pay tax discontinuous the trade, profession, employment or calling on the basis of which he is liable to pay the tax such person shall within 30 days of his discontinuing such trade, profession, employment or calling notify the fact to the District Excise and Taxation Officer, under section 10 of the Punjab Professions & Trade Tax Rules, 1977.