Professional tax - where to pay when LLP and partners are located in different states

Service Tax (Legacy) 1361 views 3 replies

HR

28 Points Posted on 26 January 2024

My business is registered under an LLP. The registered office of the LLP is in Pune, Maharashtra. The LLP has only 2 partners and both resided in Pune at the time of opening the LLP. Professional Tax (PT) registration was done for LLP and both the partners with Maharashtra PT department and tax was paid accordingly. The nature of business is service-based and it is provided online to clients across the country. GST registration is not applicable. There are zero employees, partners do all the work of LLP; so no PTRC enrolment for LLP, only PTEC enrolment for LLP & both partners.

Now, both the partners have relocated to Bangalore, Karnataka. The LLP continues to be registered in Pune. My queries are as follow:

1) While the LLP pays PT in Maharashtra, can the partners continue to pay PT to Maharashtra as before?
2) If partners try to register with Karnataka government, they may be a demand to pay PT for the partners by both Maharashtra and Karnataka. Can we skip registration with Karnataka Professional Tax department?

Note: It is not feasible to move the LLP registered office to Bangalore (as it would be unnecessary from MCA standpoint, besides being cumbersome & expensive). We would want to leave the regd. office in Pune as it is.

Thank you.

Replies (3)

Quick Summary

The discussion concerns Professional Tax liability when an LLP remains registered in Maharashtra while its partners relocate to Karnataka. It examines whether PT can continue to be paid in Maharashtra, the need for separate registration in Karnataka, and the distinction between PT obligations of the LLP and its partners.

Saravanan nagaraj

463 Points Posted on 27 January 2024

1) Please continue in Maharashtra.

2) PT is payable by Individual. Employer deduct PT from employee's salary and pay to state government (Municipal Corporation) on behalf of employee.

3) PT tax deductible limit is Rs.2400 per annum. Either partnership company can deduct or you can take individual registration. No need to take multiple registration.

4) As you mentioned GST is not applicable for your business. Because of no employee. GST registration is mandatory whose turnover Trade Rs.40 lakhs and Services Rs.20 lakhs. If you do both Rs.20 lakhs. Please check your turnover.

5) If you are partner in your LLP, you both can work but you can't draw salary for your employment. Income Tax will disallow your salary expenses. Interest on your partners capitals and Profit sharing should be accounted in your books. Not salary.

Please consult with your charted accountant.

HR

28 Points Posted on 28 January 2024

Thank you for your response.

From your point #1, I understand that there is no need to take PT registration in Karnataka separately for the partners. PT payment to Maharashtra can continue as-is.
[Currently, LLP books include payment of PT as business expense. Rs. 7,500 p.a. is paid to Maharashtra govt. - 2500 for each of LLP, partner A and partner B]

Originally posted by : Saravanan nagaraj
	3) PT tax deductible limit is Rs.2400 per annum. Either partnership company can deduct or you can take individual registration. No need to take multiple registration.

In point #3, are you saying that either LLP pays or partners pay and both don't need to pay PT?
Because, from my understanding the registration of LLP and its partners are all separate and each entity/registering party must pay their own PT. Am I wrongly interpreting your statement? Kindly clarify.

[Footnote: To add further detail to my original query - GST is not applicable as the turnover is currently less than INR 20 lakhs p.a. Partners are not paid salary; they are only paid remuneration as allowed by sec 40(b) of IT Act. Any payments to partners are as per the LLP deed.]

Saravanan nagaraj

463 Points Posted on 28 January 2024

Point # 3, yes, you are right. Partners are separate from business entity. It is your liability. You should deduct from partner remuneration.

As an Individual, everyone has responsibility to make PT. If your partner who reside in Karnataka, his personal earning from his proprietary business. He can register himself in karnataka.