SDMC plans to levy professional tax on self-employed people, firms

Professionals working in south Delhi areas will have to shell out more money on taxes in the coming months as the South Delhi Municipal Corporation (SDMC) will soon

Professionals working in south Delhi areas will have to shell out more money on taxes in the coming months as the South Delhi Municipal Corporation (SDMC) will soon start colelcting a ‘professional tax’ from companies operating in areas under its jurisdiction.

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According to SDMC officials, the civic body is planning to implement professional tax over the next two months. Self-employed professionals such as doctors, lawyers, chartered accountants, and architects, among others, will also have to pay the new professional tax. However, those earning less than ₹20,000 a month have been kept out of the ambit of the new tax.

A senior SDMC official, on condition of anonymity, said a plan to implement professional tax has already been finalised and it will now be passed by the House on July 27. The official said the professional tax is collected against the amenities being provided by the civic body to professionals and companies.

“Since the proposal has already been approved by the standing committee, there will be no problem in getting it passed by the House. After that, it will be sent to the Delhi government for a gazette notification and then we will start collecting the tax from companies and self-employed professionals. The new tax is likely to be implemented in two month’s time,” the official quoted above said.

As per the move, a professional tax of ₹150 per person per month will be collected from those earning between ₹20,000 and ₹50,000 a month while it would be ₹200 per person per month for those earning above ₹50,000 per month.

The tax will be charged even if the person doesn’t live in the SDMC areas but works there. Traders will remain outside the ambit of the tax.

The official said this would be the first time that a professional tax is being implemented in Delhi. This tax is already levied in 19 states across the country, including Maharashtra, West Bengal, Bihar and Gujarat, among others.

These recommendations for realising a professional tax were made in the SDMC’s 2020-21 budget proposal for the enhancement of revenue. The SDMC officials said the new tax will net the corporation an income of ₹50 crore a year.

Anamika Mithilesh, SDMC mayor, said in the past few years, the civic body had refrained from imposing this tax on the public but this year due to “acute fund crunch”, the proposal was approved.

“Instead of relying solely on funds from the state or central government, we are taking steps to increase our revenue by enhancing our sources of income. This year, our income has gone down drastically due to the Covid-19 pandemic and so we decided to go ahead and levy the professional tax. This move will bring a revenue of ₹50 crore a year to the cash-strapped civic body. We are hopeful of people’s support i this regard,” the mayor said.

Mithilesh said very soon, notices would be issued to firms operating in SDMC areas informing them about the professional tax and its modalities. The companies will be asked to submit the amount to the civic body after a gazette notification from the Delhi government.

A second official, also on condition of anonymity, said efforts are being made to add professional tax to the house tax bills so that people can pay it along with the property tax. He, however, said modalities on this front are being worked out.

“It can be collected online as well as offline. Professional tax will be collected from all companies and self-employed people whose office is in SDMC areas. The maximum tax will be ₹200 per month or ₹2,400 annually. The minimum will be ₹150 a month or ₹1,800 annually. People will be given options for making either monthly or annual payments. The accounts of companies will be attached if they fail to pay professional tax within the given time frame,” the official said.

Dr Akanksha Singh, a gynaecologist who has a clinic in Lajpat Nagar, said burdening the public with more taxes is not fair. “People are already paying a number of different taxes and one more will only put more burden on their pockets. The condition of professionals, be it self-employed or the service class, is not good especially during these times of the coronavirus pandemic. People are already going through a lot of problems and imposing one more tax will only make things more difficult,” she said.