Skip to content

CS Executive · Setting Up of Business, Industrial and Labour Laws · Various Initial Registrations and Licenses

Kavya Foods Pvt Ltd has 12 employees in a Karnataka unit, one of whom is a director drawing a salary of Rs 60,000 per month. Which statement best describes how Professional Tax registration works for the company?

Professional Tax is a State levy, so Kavya Foods must follow the Karnataka law. It needs a registration certificate to deduct and remit employees' tax and, where it is itself liable, an enrolment certificate. It is not administered by EPFO and has no 100-employee threshold.

  1. AProfessional Tax is levied by the Central Government and registered through the EPFO portal
  2. BThe company must obtain an enrolment certificate for its own liability and a registration certificate for deducting and paying employees' tax, under the State lawCorrect
  3. CProfessional Tax applies only to companies with more than 100 employees
  4. DProfessional Tax is exempt for companies, as only individuals pay it

Explanation

Professional Tax is a State levy under State Acts. An employer deducts tax from employees' salaries and deposits it under a registration certificate, and persons liable in their own right hold an enrolment certificate. Treating it as a Central levy via EPFO is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Various Initial Registrations and Licenses shows your real accuracy, how long you take and where you lose marks.

Practise Various Initial Registrations and LicensesFree diagnostic mock

More Various Initial Registrations and Licenses questions