WITH the April 17 deadline for the filing of annual income tax returns, a senior lawmaker has reminded taxpayers of provisions of the Tax Reform for Acceleration and Inclusion (Train) Law they may be unaware of beyond the basic income tax table.
Under Section 13 of the Train Law (Republic Act 10963), House Deputy Minority Leader Rep. Bernadette Herrera-Dy said if the taxpayers’ income during the taxable year doesn’t exceed P250,000, they are not required to file an income tax return.
“If your only source of income is compensation income or salary and you have a certificate of final withholding tax, you need not file an income tax return because that withholding tax certificate is your document proof of what is called substituted filing, which means your employer filed your ITR for you do not have to file an ITR anymore,” the Bagong Henerasyon Party-list Representative explained. “But just make sure your employer is updated on remitting to the BIR those taxes withheld.”
Herrera-Dy also pointed out that “taxpayers may be unaware of the TRAIN Law provision on 8 percent income tax on gross sales over P250,000 but not exceeding P3 million during the taxable year. Yes, the tax is only 8 percent.”
Section 5, paragraph C of the Train Law makes it easier for the taxpayer to file the mixed-income ITR form because it spares the taxpayer from the tedious work of detailing those things to deduct from gross sales to arrive at tax due, said Herrera-Dy, one of the authors of the bill that led to RA 10963.
“This provision also makes the first P250,000 of income tax-free,” she said.
Another pro-taxpayer provision is the Optional Standard Deduction (OSD) of 40 percent, which can be availed of by those mixed-income and business-income taxpayers whose incomes are over P3 million in a taxable year, the lady solon said.
“Like the 8-percent income tax rates on business income of those with lower than P3 million annual gross revenue, the [OSD] spares the taxpayer from the tedious work of detailing those things to deduct from gross sales to arrive at tax due. The taxpayer must only attach the audited financial statements to the filled-in ITR form,” she added.
