INCOME TAX is an obligation imposed on every individual or business entity based on the income received.
In Indonesia, Income Tax (PPh) Article 21 is a type of tax imposed on income received by employees from employers. PPh rates for individual taxpayers vary, ranging from 0% to 34%, depending on the amount of income.
To understand how to calculate income tax correctly, it is important to know the steps and components involved.
Steps to Calculate Income Tax
1. Calculating Net Income
Net income is gross income minus expenses permitted by tax law. These expenses include office costs, pension contribution costs, and other costs related to work. For example, an employee who receives an annual salary of Rp 100,000,000 and has an office cost of 5% of gross income and pension contributions of Rp 1,200,000 per year, then the calculation is:
- Position Fee: 5% x Rp 100,000,000 = Rp 5,000,000
- Pension Contribution: Rp. 1,200,000
- Net Income: Rp 100,000,000 – Rp 5,000,000 – Rp 1,200,000 = Rp 93,800,000
2. Calculating Non-Taxable Income (PTKP)
PTKP is the minimum limit of income that is not subject to tax. The amount of PTKP depends on marital status and the number of dependents. Based on the Regulation of the Minister of Finance Number 101/PMK.010/2016, PTKP is as follows:
- Unmarried Individuals: Rp 54,000,000 per year
- Married Individual: Rp 54,000,000 + Rp 4,500,000 = Rp 58,500,000
- Additional for Dependents: IDR 4,500,000 per person, maximum 3 people
For example, an individual who is married and has one child will have a PTKP of IDR 58,500,000 + IDR 4,500,000 = IDR 63,000,000.
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3. Calculating Taxable Income (PKP)
PKP is the difference between net income and PTKP. After determining PTKP, you can calculate PKP by subtracting PTKP from net income. For example, if your net income is Rp 93,800,000 and your PTKP is Rp 63,000,000, then PKP is:
- PKP: Rp 93,800,000 – Rp 63,000,000 = Rp 30,800,000
4. Calculating Income Tax (PPh)
Income tax rates apply based on the amount of PKP. The following are the applicable PPh Article 21 rates:
- VAT up to IDR 50,000,000: Rate 5%
- PKP Rp 50,000,000 – Rp 250,000,000:* Rate 15%
- PKP Rp. 250,000,000 – Rp. 500,000,000: Rate 25%
- VAT above IDR 500,000,000: Rate 30%
For PKP of IDR 30,800,000, the rate imposed is 5% because it is less than IDR 50,000,000:
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- Income Tax Payable: 5% x Rp 30,800,000 = Rp 1,540,000
Case Example
1. Unmarried Individuals
- Salary per month: Rp 7,500,000
- Annual income: Rp 7,500,000 x 12 = Rp 90,000,000
- PTKP: Rp. 54,000,000
- PKP: Rp 90,000,000 – Rp 54,000,000 = Rp 36,000,000
- Income Tax Payable: 5% x Rp 36,000,000 = Rp 1,800,000
2. Married Individuals with Children
- Farid’s income: Rp. 100,000,000
- Indri’s income: Rp. 100,000,000
- PTKP for Farid: Rp. 63,000,000
- PKP Farid: Rp 100,000,000 – Rp 63,000,000 = Rp 37,000,000
- Farid’s PPh: 5% x Rp. 37,000,000 = Rp. 1,850,000
- PTKP for Indri: Rp. 54,000,000
- Indri PKP: Rp 100,000,000 – Rp 54,000,000 = Rp 46,000,000
- Indri’s PPh: 5% x Rp. 46,000,000 = Rp. 2,300,000
Common Mistakes in Tax Calculation
Some common mistakes that often occur in calculating income tax include:
- Forgetting to Include Office Expenses: Office expenses, which should be 5% of gross income, are often overlooked in calculations.
- Not Calculating According to Provisions: For example, the tax rate used does not comply with the latest provisions, causing the tax calculation to be incorrect.
- Incorrectly Filling in PTKP Data: Errors in filling in PTKP data can cause the tax owed to be inaccurate.
- Using TER as a Reference for Annual Tax: Using the Average Effective Rate (TER) to calculate annual tax can result in calculations that do not comply with applicable provisions.
The Importance of Tax Compliance
Compliance in reporting the Income Tax Notification Letter (SPT) on time is the obligation of every taxpayer. Late reporting can result in administrative fines, which amount to around Rp 100,000 per year. Tax compliance not only reflects social responsibility, but also plays an important role in supporting national development.
By understanding how to calculate income tax correctly and avoiding mistakes, taxpayers can ensure that their tax obligations are properly met.
In addition, good financial planning is also important to achieve a more secure future. One way to ensure financial security is to save regularly, such as using savings products that offer various benefits. (Z-3)
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