Background
The Kerala Municipality Act, 1994 was enacted to consolidate and amend the laws relating to municipalities in Kerala. It establishes a framework for the constitution, governance, powers, and responsibilities of municipal authorities. Among its provisions, it also prescribes levies such as Professional Tax, enabling municipalities to generate local revenue for public services and civic administration.
Applicability
The Act applies to all municipal areas in Kerala, covering individuals, professionals, companies, and employers.
Compliance requirement under the Act
Professional tax shall be levied on every person, who in any half-year:
(a) exercises a profession, art or calling or transacts business or holds any appointment, public or Private
(i) within the municipal area for not less than sixty days in the aggregate; or
(ii) outside the municipal area, but who resides within the municipal area for not less than
sixty days in the aggregate; or
(b) transacts business outside the municipal area but has his head office or place from
which his business is controlled within the municipal area for not less than sixty days in the aggregate; or
(c) resides in the municipal area for not less than sixty days in the aggregate and is in
receipt of any income from investments, shall pay a half-yearly tax assessed in accordance
with the rules as may be made.
According to the Kerala Municipality Amendment Act of 2015, self-employed individuals in Kerala who make at least 12,000 rupees every six months are required to pay Professional tax.
Professional tax shall be levied on every company which:
(i) transacts business in the municipal area for not less than sixty days in the aggregate to any half-year; or
(ii) transacts business outside the limit of the municipal area but has its head office or place
from which its business is controlled within the municipal area for not less than sixty days in the aggregate in any half-year
Before the end of August and February of every year, head of office or employer shall assess every employee liable to tax and recover the amount from him and pay over to the Municipality together with a list of all employees who have been assessed to tax giving the details such as name, designation, half-yearly income and the amount of tax recovered and shall also furnish a certificate to the effect that all employees liable to tax have been included in the statement furnished.
Every self drawing officer shall, before the end of August and February every year, remit or cause to be remitted the profession tax due from him in respect of each half-year in accordance with the schedule of tax in force along with a statement showing the details of half-yearly income.
Penalties & Punishment
Conclusion
The Kerala Municipality Act, 1994 establishes the legal basis for municipal governance and taxation, ensuring local bodies have the authority to administer civic responsibilities effectively. Its Professional Tax framework mandates both employers and professionals to comply, thereby strengthening municipal revenue generation. Timely registration, enrolment, and half-yearly remittance are essential for compliance and avoidance of legal consequences.
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