THIRUVANANTHAPURAM: The State Government wants to increase profession tax from Rs 2,500 to Rs 12,000, and also widen its base by including professionals like advocates who have all this while managed to stay clear of its net. In fact, the state is considering a legislation that will make professional tax mandatory for a lawyer to practice in a court of law. To raise profession tax, a constitutional amendment is necessary. Therefore, the state will soon petition the Centre to amend the Constitution so that the annual profession tax ceiling can be raised to at least Rs 12,000. The existing ceiling of Rs 2500 was fixed 30 years ago, through an amendment to Article 276 in 1988.
As for widening the tax base, the state will create a database on all categories of professionals, traders and businessmen, employees and workers in the unorganized sector and self-employed persons. Kerala and Tamil Nadu are the only states that have granted the right to collect profession tax to its local bodies. After property tax, profession tax is the major source of 'own tax revenue' of local self governments. It constitutes around 43 percent of the total tax collection in grama panchayats, 35 percent in municipalities, and 31 percent in corporations.
"Barring government and other salaried employees, a majority of professionals like advocates, medical practitioners, tax practitioners, contractors and commission agents and brokers are not assessed for profession tax due to lack of proper records," the 5th State Finance Commission has stated in its report. The Comptroller and Auditor General's report in 2015 had also emphasised the importance of a database to widen the profession tax base.
The 5th SFC report also stated that most of the employees and workers in the unorganized sector and self- employed persons like private bus staff, lorry and truck drivers and cleaners, taxi drivers, headload and general workers, and construction workers were not assessed for profession tax.
"During our sittings with local body representatives, we were told that advocates were the group least bothered about paying profession tax," said Dr B Alwin Prakash, the 5th SFC chairman. The SFC wants the state to come hard on the profession. "It should be made mandatory that the Bar Council furnish list of advocates practicing within their jurisdiction. The advocates should voluntarily disclose their income and the profession tax be levied based on the self disclosed income, which will be subject to verification," the report stated.
