176

TOPIC NO. 11

OTHER TAXES AND DUTIES

BASIS AND PREVAILING RATES OF PROFESSION TAX AND OTHER
TAXES, IF ANY, YIELD A REVENUE OF RS. ONE CRORE OR MORE
PER ANNUM


CHENNAI, MADURAI AND COIMBATORE CORPORATIONS:

Prior to 1992, Profession Tax was levied in the State of Tamil Nadu by City Municipal
Corporations like Madras, Madurai and Coimbatore according to the provisions in the respective
Municipal Corporations Act. Subsequently, act of 24 of 1992 namely, The Tamil Nadu Taxes on
Profession, Trades, Callings and Employment Act 1992 was passed in the Legislature to levy
Profession Tax by all Corporations, Municipalities, Township Committees and Town Panchayats
in this State.


In pursuance of the report submitted by the Committee appointed by Tamil Nadu
Government dated 2nd September, 1998, to review the existing level of tax levied under Tamil
Nadu Tax on Professions, Trades, Callings and Employments Act 1992 (Tamil Nadu Act 24 of
1992), a new system on the lines recommended by the Committee was introduced for the
collection of Profession Tax in Tamil Nadu. Accepting the system, The Tamil Nadu Government
repealed the separate Act 24 of 1992 and inserted new provisions in the Chennai, Madurai and
Coimbatore Corporations vide Amendment Act 59 of 1998, i.e., Tamil Nadu Municipal Laws
(Second Amendment) Act, 1998 which came into force from 1st October 1998. Now
professional tax is assessed as per the Amended Act.


The salient features of the Act No.59 of 1998 are as follows:

The Act is deemed to have come into force on the 1st day of October 1998 and it require
recovery of profession tax for the first and second half year from every company transaction,
business and every person engaged actively or otherwise in any profession, trades, callings or
employments with the city from 1st October 1998 onwards whose half year income exceeds
Rs.21,000/- at the prevailing rates of wages. The rate of tax has to be paid as per the table
given below:






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Rates of Tax on Profession, Trades, Callings and Employments levied as per the
Act No.59 of 1998 (Second Amendment)

Sl.No. Average Half Yearly Income Half yearly tax
From To

Rs. Rs. Rs.
1. Upto 21,000 Nil
2. 21,001/- 30,000 60
3. 31,001/- 45,000 150
4. 45,001/- 60,000 300
5. 60,001/- 75,000 450
6. 75,001/- and above 600


SALEM, TIRUCHIRAPPALLI AND TIRUNELVELI CORPORATIONS:
Tiruchirappalli, Salem and Tirunelveli were constituted from 1.6.1994. The profession tax
in Tiruchirappalli City Corporation is being levied as per the Coimbatore City Municipal
Corporation Act 1981, amended from time to time. The profession tax of the Salem City
Corporation is being levied under section 133 of the Salem City Municipal Corporation Act,
1994.

The rates of profession tax in Tiruchirappalli, Salem and Tirunelveli are the one and the
same. The rates of profession tax levied in these Corporations are mentioned below. (As per
G.O. Ms. NO. 249 M.A.&W.S. Dept dt. 28.12.98). The rate of tax has to be paid as per the table
given below:

Table

Sl.
No. Average half yearly income Half yearly tax
From To
Rs. Rs. Rs.
1. Upto Rs. 21,000/- - Nil
2. Rs. 21,001 Rs. 30,000 Rs. 60
3. Rs. 30,001 Rs. 45,000 Rs. 150
4. Rs. 45,001 Rs. 60,000 Rs. 300
5. Rs. 60,001 Rs. 75,000 Rs. 450
6. Rs. 75,001 and above Rs. 600

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MUNICIPALITIES:

A person in the service of a body, whether incorporated or not, which is owned or
controlled by any Central or State Government, where such body operates with in the Local
Bodies limit, even though its head quarters may be out side the limit and who is engaged
actively or otherwise, in any profession, trade, calling and employment in the State of Tamil
Nadu and includes a Hindu undivided family, firm, company, corporation or any other corporate
body, society, club, body of persons or association, so engaged, but does not include any
person employed on a casual basis; are assessed to profession tax on the basis of their
aggregate average half yearly income commenced from the 1st day of April to the 30th day
of September and from the 1st day of October to the 31st day of March of a year by
obtaining of returns. The Profession Tax is levied on the basis of gross income including all
emoluments except Conveyance Allowance receiving pay from the revenue of any Central or
State Government and the every employer should deduct the tax payable by the employees
from their salaries and wages and remit the same to the respective Local Bodies. Prior to
1992, the Profession Tax was levied in the Municipalities and Municipal Township Committees
according to the provisions in section 93 to 97 with the rules 16 to 19 in Schedule-IV of Part- I
under the Tamil Nadu District Municipalities Act 1920 [Act No: 5 of 1920] and City Municipal
Corporations like Madurai and Coimbatore according to the provisions in the section 132 to 139
with the rules 17 and 18 in Schedule -II of Part-III under the Madurai City Municipal Corporation
Act 1971 [Act No:15 of 1971] and section 133 with the rule 17[1] in Schedule-II of Part-III under
Coimbatore City Municipal Corporation Act 1981 [Act No:25 of 1981]To consolidate and to
provide for the levy and collection of profession tax, an common Act in No: 24 of 1992 namely
The Tamil Nadu Tax on Professions, Trades, Callings and Employments Act 1992 had been
brought into force with effect from 1st April 1992 in all Municipal Corporations, Municipalities,
Municipal Township Committees, Town Panchayats and Panchayats in this State. Further
amendments had also been issued to this principal Act in No: 9 of 1994 and 12 of 1995,
refixing the minimum and maximum rates. To review the above Act, a Committee was
constituted by Government in GO [Ms] No: 65 Municipal Administration and Water Supply
Department Dated: 24.04.98 with a direction to submit its report within three months. The
Committee submitted its report on 02.09.98.The Government had accepted the
recommendations of the Committee and a new Act in No: 59 of 1998 namely Tamil Nadu
Municipal Laws [Second Amendment] had been enacted by repealing the above common Acts
viz., Act No: 24 of 1992, 9 of 1994 and 12 of 1995 by incorporating the amended provisions in
the Tamil Nadu District Municipalities Act 1920, Madurai City Municipal Corporation Act 1971
and Coimbatore City Municipal Corporation Act 1981, introducing a new system.

Consequently, new rules called as The Town Panchayats, Municipalities and Municipal
Corporations [Collection on Professions, Trades, Callings and Employments] Rules 1999 had
also been framed in GO[Ms] No: 11 Municipal Administration and Water Supply Department
Dated: 12.01.99 under the above amended provisions. The above new Act and rules came into
force with effect from the 1st October 1998.This new act had also a provision for the collection
of arrears of tax under the 1992 Act for the period from 1st April 1992 to 30th September 1998
in six equal half yearly instalments. To facilitate the above provision, Government had issued
the rules in GO[Ms] No: 249 Municipal Administration and Water Supply Department Dated:
28.12.98, called as The Town Panchayats, Municipalities and Municipal Corporations
[Collection of arrears of tax on Professions, Trades, Callings and Employments] Rules 1998
and the same also came into force with effect from the 1st October 1998.This new rules permits
the Executive Authority may extend the time limit for filing the return by assessees by thirty
days from 31st October 1998 and shall further not later than 28th February 1999. Further the
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time was extended up to 30th April 1999 in GO[Ms] No: 71 Municipal Administration and Water
Supply Department Dated: 05.03.99.The rates fixed in the new Act No: 59/98 shall be revised
by the respective Council once in every five years, without change or revise the slabs of
average half yearly income fixed in the above new Act and such revision shall be increased not
less than 25% and not more than 35% of the tax levied, before the date of revision. The next
quinquennial revision of tax is due from 1st October 2003.

The details of Profession Tax levied in the Municipalities are given below :-
Sl. Average half yearly income Half yearly tax
No. From To
Rs. Rs. Rs.
1. Upto Rs. 21,000/- - Nil
2. Rs. 21,001 Rs. 30,000 Rs. 60
3. Rs. 30,001 Rs. 45,000 Rs. 150
4. Rs. 45,001 Rs. 60,000 Rs. 300
5. Rs. 60,001 Rs. 75,000 Rs. 450
6. Rs. 75,001 and above Rs. 600

LIBRARY CESS: The Library cess is levied under section 12(1)(a) of the Tamil Nadu Public
Libraries Act. 1948 in the form of surcharge on the property tax or house tax levied under the
Tamil Nadu District Municipalities Act, 1920 or the Tamil Nadu Local Boards Act, 1920 as the
case may be. As per section 12(3) of the Tamil Nadu Public Libraries Act. 1948, the
Government were sanctioning matching grant to the Local Library Authorities. But, consequent
on the provincialisation of the services of the Local Library Authority employees, in
G.O[Ms]No:820, Education Department dated: 03.05.1982, the sanction of matching grant by
Government has been discontinued and the salary expenditure is being met by the Government
with effect from 01.04.1982.The last revision was made during 1992 and as per G.O [Ms]
No:492, Education, dated 19.05.1992, the library cess has been enhanced from five paise to ten
paise per rupee with effect from 01.04.1992 and the same is being continued till date. Thus the
revision is substantial in the recent years.

The whole amount of the library cess collected is transferred to the Local Library
Authorities by the local bodies and from the sources of the library cess the Local Library
Authorities are meeting the expenditures like purchase of books, periodicals, newspapers, tools
and plants, stationery forms and registers, book racks, payment of rent, electricity charges,
contingent expenditures, construction of library buildings, etc., The local bodies collecting the
library cess are not properly remitting the amount to the Local Library Authorities promptly.
Hence, there is an arrears of Rs.26,13,46,156/- during the year 1996-97.After examining this,
Government in GO [Ms] No: 294, School Education Department, dated 11.07.97 have issued
orders to remit the library cess arrears to Local Library Authorities in four instalments, being
2/5th of the arrears in the first year and the balance three instalments during the next three
years. Government have also ordered that, from the year 1997-98, if the local bodies are failing
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to remit the current year dues without pending arrears to the concern Local Library Authorities in
the same year, the same has to be deducted from the Grant released by Government to the
local bodies and the same has to be remitted to the Library Authorities directly. An amount of
Rs.28 crores had been remitted during the year 2001-02 by Municipalities to the concerned
Local Library Authorities. An amount of Rs.8.75 crores released to the Municipalities and
Rs.1.67 crores released to the Corporations were deducted from the Equalisation Funds during
the year 2002-03 and the same has been remitted to the Library Authorities. The outstanding as
on date, to be remitted to Library authorities is Rs.16 crores. All the Urban Local Bodies are
directed to remit the cess promptly.

EDUCATION TAX: Education tax is levied under Elementary Education Act 1920, as the
surcharge on property or profession taxes. Under Sections 34 and 35 of the Madras
Elementary Education Act, 1920, the following shall be the rates of levy of Education tax by the
Municipal Councils and from the first day of October 1965. i)Education tax on the annual value
of the buildings - 5 % per annum ii)Education tax on capital value of vacant land - 1/4% per
annum. The procedure laid down for the levy of property tax should be followed in respect of
Education Tax also as per G.O [Ms]No:1693 Education Department dated 15th September
1965.There is no provision in the Madras Elementary Education Act 1920 or in the Madras
District Municipalities Act 1920, enabling the Government to control the levy of Education tax by
the Municipal Councils. Various items of expenditure connected with Elementary Education
Fund are given below:-

1) Establishment :- a) Employment of staff to maintain the accounts of Elementary
Education Fund b) Employment of Supervisors of schools c) Employment of Music teachers
d) Employment of night watchman

2) Distribution of prizes
3) a) Contribution to summer schools. b) Conduct of monthly central classes of
teachers. c) Educational Exhibition and teachers Conference. d) Educational Exhibition
and teachers Conference

4) Purchase of journals
5) a) Payment of gratuity to teachers. b) Contribution towards P.F. of teachers
6) Purchase of postage stamps and stationeries.
7) a) Purchase of games materials The games materials can be purchased subject to
the conditions laid down in G.O. 318, Education Department dated 2nd March
1931.7) b) Scouting and School Girls guiding. c) Organisation of J unior Red Cross.

8) Purchase of harmonium
9) Repairs to rent free buildings and Municipal buildings.

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Contribution: Under Section 37 of the Madras Elementary Education Act 1920, the
Government shall contribute to the Municipalities that levy Education Tax under Section 34, a
sum equal to 50% net proceeds of the taxation levied in the Municipalities under the Head of
Property tax and Profession tax. The contribution stopped to urban local bodies, after taking
over of teaching and non-teaching staff by Government.

In G.O.Ms. No: 347 Education (C1) Department dated: 09.03.90, the staff of schools under
the control of Corporations and Municipalities were deployed as Government Servants and the
expenditure towards the salary was also decided to be borne by the Government with effect
from 01.04.90.Now the Municipalities are maintaining the Municipal School buildings, as per
G.O.Ms. No: 65 Municipal Administration and Water Supply (IV) Department dated:
02.03.99.Further in G.O.Ms. No: 209 School Education Department dated: 07.12.2001, the
Municipalities and Corporations are directed to incur the expenditure from Education fund for
creating infrastructure to introduce computer education.

TOWN PANCHAYATS:
Profession Tax is being levied by the Town Panchayats according to section 93 to 97 of
the Tamil Nadu District Municipalities Act, 1920 and in accordance with the rules 16 of Part 1 of
Schedule IV of the said Act.

The rates of profession tax in Town Panchayats are being levied as the one levied by
the Municipalities. The rates of profession tax levied in the Town Panchayats are mentioned
below.


Sl. Average half yearly income Half yearly tax
No. From To
Rs. Rs. Rs.
1. Upto Rs. 21,000/- - Nil
2. Rs. 21,001 Rs. 30,000 Rs. 60
3. Rs. 30,001 Rs. 45,000 Rs. 150
4. Rs. 45,001 Rs. 60,000 Rs. 300
5. Rs. 60,001 Rs. 75,000 Rs. 450
6. Rs. 75,001 and above Rs. 600

VILLAGE PANCHAYATS:
There was already provision under Section -121of the Tamil Nadu Panchayat Act, 1958
to levy and collect the Profession tax payable by the employees from their salaries or wages
and the employer has to deduct the same and remit this tax to the concerned village
panchayats.

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Subsequently, an act namely "The Tamil Nadu Tax on Profession, Trade, callings and
Employments Act, 1992" was enacted to levy the tax on the profession, calling, trading and
employment (Act No. 24 of 1992 both for urban and Rural local bodies as common Act).

The above Act was repealed. An amendment to the Tamil Nadu Panchayats Act, 1994
was issued incorporating a provision to levy tax on Profession, Trade, Calling and Employment
under Section -198-A to I (Act No. 55 of 1998). As per Section-198 of the Tamil Nadu
Panchayats Act, 1994, the rate of tax is as below:-

Sl. Average Half yearly income Half yearly Tax
No. ------------------------------------
From To
Rs. Rs. Rs.
1. Upto 21,000/- --
2. 21,001/- 30,000 60
3. 30,001/- 45,000 150
4. 45,001/- 60,000 300
5. 60,001/- 75,000 450
6. 75,001/- and above 600