Karnataka Professional tax on Partners of a firm or the LLP

The article discusses Karnataka's professional tax on partners in a firm or limited liability partnership (LLP). It explains the exemption criteria for firms, such as tax payment by the firm within the designated tax slab for its specific class of persons, registration under the Karnataka Shops and Commercial Establishments Act, and not being liable for income tax or certain specified activities. The article provides helpful information on the eligibility for tax exemption and more.

Karnataka PTEC for LLP Partner
Partners of LLP who are engaged in any profession, trade, or calling are exempt from paying Profession Tax in the state of Karnataka, provided the tax is already paid by the LLP in which they are the partners. The LLP is a separate legal entity and is separately listed in the schedule of the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976, as amended by the 2023 Amending Act. Therefore, the LLP is mandatorily required to enrol under the PT and pay an annual professional tax of ₹ 2500/- within its due date.

Taxability of the Partnership Firm or their partner

Although the partnership firm is not listed separately as a taxpayer under the PT Schedule, it may still be subject to the professional tax. The professional tax schedule in Karnataka has four categories, and if a person falls under any of these categories, they will be liable to pay the tax. Additionally, if the partnership firm pays the professional tax at a rate of ₹2500 per annum, then the individual partners of that firm are exempt from paying professional tax.

Situation When a Partnership Firm is liable for Professional Tax

  1. The firm is engaged in any profession, trade or occupation listed in the Schedule of the Karnataka Professional Tax.
  2. The firm is registered under the GST
  3. The firm is registered under the Karnataka Shops and Commercial Establishments Act, 1961, and employs five or more employees.
  4. The firm is liable for Income Tax under the Income Tax Act, of 1961

In conclusion, Karnataka's professional tax on partners in a firm or LLP is an important aspect to consider for businesses operating in the state. This article provides valuable insights into the exemption criteria for firms and the taxability of partnership firms and individual partners. By understanding the eligibility for tax exemption and other relevant information, businesses can ensure compliance with the regulations and avoid any penalties or legal issues.


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