1. We are writing to you on behalf of Aparajitha Corporate Services Private Limited, a company engaged in providing compliance services, through the use of technology to over 2000+ clients, PAN India. We offer knowledge-driven, tech-enabled Labour, Industrial, and Financial Compliance Solutions across India. Our domain-specific services are crafted to assist businesses with the necessary licenses, registrations, and compliance management under various domains.
2. Through this letter, we wish to offer a few recommendations to address the challenges faced by companies operating in Kerala, regarding the payment of Professional Tax. Under Section 245 of the Kerala Municipality Act, 1994, every person who exercises a profession, art or calling or transacts business or holds any appointment, public or private within a municipality is required to pay a half yearly tax that is known as Professional Tax. Professional Tax must be paid on a half-yearly basis. For the period from April to September (1st Half Year), the payment deadline is 30th September, and for the period from October to March (2nd Half Year), the payment deadline is 31st March. Payments made after these dates incur penalties under the Act. These deadlines impose an unreasonable burden on the employers, for instance, contributions for the 1st Half-Year must be calculated up to the month of September and remitted before 30th of September, even though the month of September is not yet complete. It would be more reasonable to allow time for remittance after the completion of the Half-Year period, rather than requiring it within the last month of the Half Year period.
3. Currently, Professional Tax payments are processed offline, requiring employers to undergo a tedious procedure at the municipality where the company is located. For companies with multiple branches in different municipalities, separate payments must be made at each location. The process involves manual submission of two documents: a covering letter and a statement containing the details of all employees, their salaries over the half-yearly period, and the corresponding contributions to be made. Once these documents are submitted, the payment is made, after which the authority acknowledges the remittance and issues two receipts—one for the employee and one for the employer. It is important to note that these acknowledgment receipts are paper-based and provided manually. They must be preserved as proof of compliance. Additionally, this process takes up an exorbitant amount of time. Each payment can take up to two hours due to administrative delays in the Municipal offices, when payments are made for 700–800 entities, the process becomes highly time consuming.
4. Moreover, while the procedure for remitting Professional Tax is uniform across Kerala, the penalties imposed by certain municipalities vary. For instance, in Calicut and Kollam, a penalty of ₹1,250 is imposed in addition to a 2% monthly penalty. This lack of uniformity in penalty structures creates confusion and adds a financial burden on employers.
5. Although the Kerala Government assures that Professional Tax remittances can be made online, this system has not yet been fully implemented. Previously, there was a portal with the URL “www.professiontax.lsgkerala.gov.in”, which is currently inactive. This portal facilitated the online payment of Professional Tax and generated receipts upon payment. However, while providing services to our clients across Kerala, we observed that these receipts are not acknowledged by the relevant authorities as valid proof of Professional Tax remittance. We are also unaware of where these payments are being directed. There is another portal called the “KSMART” portal (Kerala – Solution for Managing Administrative Reformation and Transformation), an official portal of the Kerala Government. While the KSMART portal provides a streamlined interface for various services offered by local governments—such as Trade Licenses, Birth Certificates, Building Permits, and Property Tax payments—it does not include an option for the online remittance of Professional Tax.
6. It is important to note that many states in India permit annual payment of Professional Tax, thereby reducing the frequency of compliance. In almost all states where Professional Tax is levied, online payment options are available all over the state, streamlining the process and easing the compliance burden for businesses thereby encouraging higher compliance rates for Professional Tax payments.
7. In light of these factors, we respectfully request you to consider the following:
a) To effectively implement online mode of payment for Professional Tax through a specified portal, which can be acknowledged as compliance
b) Upon implementation of a portal, for companies having different units within the State of Kerala, a single Registration may be allowed, with centralized remittance, to avoid multiplicity of administrative work.
c) To change the frequency of Professional Tax payments to annual basis
d) To permit employers to deduct Professional Tax on a monthly basis and remit the tax annually, which will make the process of calculating the Professional Tax easier and also, more accountable.
e) Extend timeline for remitting professional tax till 31st October for 1st half of the year (1st April – 30th September) and 30th April for 2nd half of the year (1st October- 31st March).
8. Implementing these measures would significantly promote ease of doing business within the state, enhance efficiency for employers and reduce the regulatory burden the employers currently face by making Professional Tax payments through the offline method. We believe such reforms would contribute to a more business friendly environment in Kerala and ultimately assist in building Kerala as a hub for business.
K Varadan
Chief Consulting Officer
