Summary of the Bihar Profession Tax Act, 2011 (Bihar Act 10 of 2011)

 

Summary of the Bihar Profession Tax Act, 2011 (Bihar Act 10 of 2011)

This Act governs the levy and collection of tax on professions, trades, callings, and employments in the State of Bihar.

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🧾 1. Scope and Applicability

• Applies to all of Bihar.

• Came into force via Gazette notification dated 27 May 2011.

• Inspired by Article 276 of the Constitution of India.

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👤 2. Definitions

• Person: Any individual engaged in a profession, trade, calling, or employment, including:

  • Hindu Undivided Families (HUF)

  • Companies and Corporations

  • Societies, Clubs, Associations
    (Excludes casual wage earners)

• Employee: Any salaried individual in the service of:

  • Central/State Government

  • Government-controlled body

  • Private employers

• Employer: Any authority responsible for salary disbursement (head, manager, or agent of an entity)

• Salary/Wages: Includes basic pay, dearness allowance, perquisites, and other regular income (aligned with Section 17 of Income Tax Act, 1961)

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💰 3. Levy of Profession Tax [Section 4]

Profession Tax is levied annually and capped at ₹2,500 as per Article 276(2) of the Constitution.

📊 Rate Schedule (as per Act Schedule)

Annual Income Range	Profession Tax (per annum)
₹3 lakh – ₹5 lakh	₹1,000
₹5 lakh – ₹10 lakh	₹2,000
Above ₹10 lakh	₹2,500

💡 Examples:

• A private tuition teacher earning ₹4.5 lakh annually will pay ₹1,000/year.

• A CA earning ₹9.2 lakh will pay ₹2,000/year.

• A company director earning ₹15 lakh/year will pay ₹2,500/year.

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🏢 4. Employer’s Responsibility [Section 5]

• Must deduct tax from employee salary and deposit it.

• Responsible for payment even if deduction is missed.

• If a person has multiple employers, they can choose to pay tax directly by submitting a declaration.

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📝 5. Registration and Enrolment [Section 6]

• Employers must register.

• Non-salaried individuals (like professionals, traders) must enrol separately.

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📑 6. Returns and Payment [Section 7]

• Returns must be filed annually (format to be prescribed).

• Late return or payment may lead to:

  • Penalty up to ₹100/month

  • Interest @2% per month on delayed amount

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⚖️ 7. Consequences for Non-compliance [Sections 8–12]

• Interest: Simple interest @2% per month on unpaid tax.

• Recovery: Treated as arrears of land revenue.

• Appeal: Permitted within 45 days, only after full payment of disputed amount.

• Offences:

  • Fine up to ₹5,000 or imprisonment up to 3 months

  • ₹50/day if offence continues

  • Officers of companies can be held personally liable

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🔄 8. Administrative Powers [Sections 13–14]

• Authorities may transfer proceedings between officers.

• Offences can be compounded on payment up to ₹5,000 or double the tax amount, whichever is higher.

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🚫 9. Exemptions [Section 15]

• Armed Forces personnel are exempt.

• State Government may exempt any group via notification (e.g., BPL households, senior citizens).

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🛑 10. Local Bodies Barred [Section 16]

• Local authorities cannot levy profession tax after this Act came into force.

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🧾 11. Power to Amend Schedule and Make Rules [Sections 17–18]

• State Government can change rates or slabs via notification.

• Rule-making authority rests with the State Government, subject to legislative review.

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⚙️ 12. Integration with VAT Administration [Section 3]

• All provisions of Bihar VAT Act, 2005 apply mutatis mutandis:

  • Assessment, reassessment

  • Recovery, appeals

  • Inspection and audit

  • Penal proceedings