How to Compute Income Tax Withheld on Compensation under TRAIN Law?
By: Accounting Concepts
Tags: Philippines, Consulting, Accounting, Tax

Tax Accountants in Philippines: This guide is for entrepreneurs, proficient, bookkeepers, clerks, understudies who need to figure out how to figure out to register Income Tax Withheld on Compensation under TRAIN Law.

In the wake of perusing this guide, you will learn:

What is the Formula in Getting the Employee’s Taxable Compensation? What are remembered for the Total Amount of Compensation? What are Included in Non-Taxable/Exempt Compensation? How to Get the Prescribed Withholding Tax of each worker?

What is the Formula in Getting the Employee’s Taxable Compensation?

Below is the formula in getting the Employee’s Taxable Compensation:

2. What are included in the Total Amount of Compensation?

Pay implies all compensation for administrations performed by a representative for his boss under a business worker relationship.

This incorporates Salaries, Wages, Board and Lodging Allowances, Transportation Allowances, Commissions, Bonuses, Overtime Pay, Tips and Service Charge, Employer’s SSS, PHIC, and HDMF Contributions and other pay Income excluded from Withholding Tax

3. What are Included in Non-Taxable/Exempt Compensation?

The accompanying pay installments are excluded from the necessity of retaining charge on pay.

These are the things that you deduct after you add it in the Total Compensation Income:

Compensations got as an episode of business like Retirement Benefits Compensation paid for agrarian work

Farming work does exclude administrations acted regarding ranger service, blundering, or finishing.

Compensation for administrations of a family nature performed by a representative in or about the private home of the individual he is utilized isn’t liable to retaining. Compensation for easygoing work not throughout business’ exchange Pay for administrations by a resident or occupant of the Philippines for an unfamiliar government or a global association. Harms like Actual, good, praiseworthy and ostensible harms got by a representative or beneficiaries emerging out of or identified with business worker relationship. Life coverage Sum got by the guaranteed as an arrival of premium Remuneration for wounds or affliction Pay excluded under arrangement Thirteen thirteenth month pay and Other advantages not surpassing P90,000.

a. Multi month pay

b. Different advantages, for example, Christmas reward, Productivity Incentive Bonus, Loyalty Award, present in real money or in kind, and Additional Compensation Allowance (ACA)

Remembered for the Other Benefits are the De Minimis Benefits.

GSIS, SSS, Medicare and different commitments

Remembered for the Other Contributions are the Employer’s Philhealth and Pag-Ibig Contribution.

Remuneration Income of Minimum Wage Earners (MWEs)

a. Legal Minimum Wage (SMW)

b. Occasion Pay

c. Additional time Pay

d. Night Shift Differential Pay

e. Danger Pay

Occasion Pay, Overtime Pay, Night Shift Differential, Hazard Pay will be duty excluded just if the Employee is a Minimum Wage Earner.

Remuneration during the year not surpassing Two hundred Fifty Thousand Pesos (P250,000)

References:

a. Republic Act 10963 (Train Law)

b. Implementing Republic Act №8424 (RR 2–1998)

c. Amendments Introduced by TRAIN Law Relative to Withholding of Income Tax (RR 11–2018