✨ Introduction

Professional Tax (PT), levied under the Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987 (“the Act”), was designed to be a simple, nominal levy on professionals and businesses. However, in recent years, several practices adopted by departmental authorities have deviated from the legislative intent, leading to an unwarranted financial burden on taxpayers. This article seeks to professionally expose how departments are extracting professional tax beyond what the law stipulates, disguised under administrative interpretations.

---

🔹 Legislative Framework of Professional Tax

1. Key Legal Provisions

• Section 3(2) of the Act: Every person engaged in a profession, trade, calling or employment falling under any class specified in the Schedule is liable to pay tax at the rates mentioned therein.
• Schedule for Companies: “Companies (registered under the Companies Act, 1956/2013 or any other Act): Professional Tax = ₹2,500 per annum.”
• Section 5 of the Act: Requires employers to deduct PT from employee salaries based on salary slabs and remit it to the government.

2. Purpose of Professional Tax

• To generate revenue for State Governments.
• To ensure equitable contribution from those engaging in business, employment, or trade.
• NOT intended as a per-location tax.

---

🔹 Misinterpretation and Departmental High-Handedness

Despite the clear legislative framework, departmental authorities have been misapplying and misinterpreting the law to:

(i) Demand ₹2,500 Professional Tax per store/branch

• Companies operating multiple stores are being coerced to pay ₹2,500 for each location, despite the Act mandating only one payment per entity.
• Branches are not separate legal persons — they are merely extensions of the principal business.

(ii) Demand Separate Registrations for Each Branch

• The Act allows for centralized registration.
• Field officers force companies to apply for separate PT registrations for each municipal jurisdiction, without any statutory basis.

(iii) Threats of Penalty and Harassment

• Threats of “inspections,” “penalty proceedings,” and “business disruption” are common to enforce these unjustified collections.

(iv) Violation of Ease of Doing Business

• Multiple registrations, payments, and compliances per store completely defeat the purpose of simplified tax compliance policies promoted by both the State and Central Governments.

---

🔹 How the Law Actually Favors the Taxpayer

1. Single Entity — Single Payment Principle

• A company is a single legal entity irrespective of the number of its branches.
• One payment of ₹2,500 per annum suffices under law.

2. Employee-wise Professional Tax Compliance

• Employers are liable to deduct and remit PT based on employee salaries across branches under centralized registration.
• No provision in law mandates separate store-wise PT deductions or payments.

3. Judicial Support

• Karnataka HC (Associated Cement Companies Ltd. v. State of Karnataka): Centralized compliance valid.
• Bombay HC (Godrej & Boyce Mfg. Co. Ltd. v. State of Maharashtra): Branches cannot be treated as separate taxable persons.

4. Penalty Provisions to Be Triggered Only for Genuine Defaults

• Penalties can be imposed only for real non-compliance — not for contesting illegal departmental demands.

---

🔹 Practical Scenarios: Explained

Scenario	Lawful Position	Department’s Wrong Practice
Company with 100 stores	₹2,500 PT per annum for Company	₹2,500 demanded per store
Employees in multiple branches	Deduct PT as per salary slabs under one registration	Forced to take separate registrations and pay per location
Centralized Registration	Legally allowed	Forced local registrations
Litigation Threats	Available to taxpayer	Department threatens but avoids formal notices to prevent litigation

---

🔹 Recommendations for Businesses

• Insist on centralized registration and compliance.
• File representations citing legal provisions if officers insist on per-branch payments.
• Maintain proper records of employee-wise PT deduction and remittance.
• Escalate harassment through formal complaints to higher authorities.
• Challenge illegal demands through writ petitions under Article 226 of the Constitution if needed.

---

🔹 Conclusion: Time for Businesses to Stand United

The unjustified demands for per-branch PT payments are nothing but unauthorized tax collections, lacking any basis under the Andhra Pradesh PT Act.

It is time businesses assert their rights professionally, ensure strict compliance with the law as it stands, and challenge illegal administrative actions whenever necessary.

Professional Tax must remain what it was designed to be — a nominal levy, not a tool for departmental overreach and revenue collection by coercion.