13 July 2009

Composition Scheme under Profession Tax for Enrollment Certificate holders

Composition Scheme is available for tax payers holding enrollment certificate under Profession Tax Act of 1975. This scheme was first brought in force from 1-5-1993. According to the scheme, enrollment certificate holder can pay profession tax in advance for five year. Also the tax payer has to pay tax for only four years instead of five years. Tax saving of one year is his benefit. However this composition amount is to be paid before 30th June in which the composition amount is paid. e. g. If a tax payer wishes to pay tax in advance for financial year 2009-2010 to 2014-15, he must pay this amount by 30th June, 2009. Tax payer can pay this amount upto 31st March 2010 by paying additional amount @ Rs.200/- per month. Persons paying tax in advance will not have to pay any tax during the period even if the rates of taxes are increased. However to claim at the benefit of the scheme, the amount is to be calculated at maximum rate, i.e. Rs,2,500/- even if lower rate of tax is applicable in the year the EC holder opts for composition scheme.