Calculating employee income tax (PPh 21) is not an easy one, even for HR Staff who did this for years, still quite complicated. It's because of the progressive tax rate, and also there are 3 methods to calculate the employee income tax.
But, in this article, Panemu will share some tips about How to Calculate Employee Income Tax (PPh 21) with various methods, including with the help of HRMS - PPh 21 calculation features.
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What is PPh 21?
Employee Income Tax (PPh 21), according Peraturan Direktorat Jendral (Perdirjen) Pajak No. PER-32/PJ/2015 is income tax on wages, salary, honorarium, allowance and other fees by name and in any forms related to work or position, services and activities performed by domestic individual tax objects or known as taxpayers.
Calculate the Employee Income Tax Component First
As we know, there are several income tax components to calculate employee net income. The components are divided by 3 categories, which is:
- Basic Salary
- Basic Monthly Wage
- Extra Hours - Allowance
- Child Support
- Other Allowance (Meal, Travel, etc)
- Health Insurance (BPJS Kesehatan) paid by Company
- Employment Insurance (BPJS Ketenagakerjaan) paid by Company
- Tax (PPh 21) Allowance - Deduction
- Position Allowance (5% from Gross Income or maximum Rp500,000 .00)
- Health Insurance (BPJS Kesehatan) paid by employee
- Employment Insurance (BPJS Ketenagakerjaan) paid by employee
Non-Taxable Income (PTKP)
The second component before we calculate the PPh 21 is PTKP. Which mean the annual NET income that is non-taxable. You can read about the PTKP rates from the government website PMK No.101/PMK.010/2016.
How to Calculate PPh 21 Nett, Gross and Gross Up Methods?
For example:
An employee's net income is Rp6,000,000 .00. The employees are not married and have no dependents.
That means, the Annual Net Salary is Rp6,000,000 .00 x 12 = Rp72,000,000 .00.
A. Nett Method PPh 21 Calculation
Calculate PPh 21 using Nett Method is where the employee income tax is paid by the company. How to calculate?
So, to calculate the PPh 21 that company should pay is:
- Taxable Income (PKP) = Annual Nett Salary - Non-Taxable Income (PTKP) TK/0
Taxable Income (PKP) = Rp72,000,000 .00 - Rp54,000,000 .00
Taxable Income (PKP) = Rp18,000,000 .00 - Employee Income Tax (PPh 21) Annual Progresif Rates
5% x Rp18,000,000 .00 = Rp900,000 .00 - Employee Income Tax (PPh 21) that should paid by Company:
Rp900,000 .00 : 12 = Rp75,000 .00
B. Gross Method PPh 21 Calculation
Calculate PPh 21 using Gross Method is where the employee income tax is paid by the employees.. How to calculate?
So, to calculate the PPh 21 that employee should pay is:
- Taxable Income (PKP) = Annual Nett Salary - Non-Taxable Income (PTKP) TK/0
Taxable Income (PKP) = Rp72,000,000 .00 - Rp54,000,000 .00
Taxable Income (PKP) = Rp18,000,000 .00 - Employee Income Tax (PPh 21) Annual Progresif Rates
5% x Rp18,000,000 .00 = Rp900,000 .00 - Employee Income Tax (PPh 21) that should paid by Employee:
Rp900,000 .00 : 12 = Rp75,000 .00
The PPh 21 Payment will be deducted from employees' take home pay.
C. Gross Up Method PPh 21 Calculation
Calculate PPh 21 using Gross Up Method is where the company gives Tax Allowance that is the same amount with the PPh 21. This method is more complicated than other methods. How to calculate?
First, calculate the Tax Allowance:
The rates of Taxable Income (PKP) Tax Allowance is:
- PKP 0 - Rp57,000.000 ,00 = PKP x 5/95
- PKP Rp57,000.000 ,00 - RP218,500,000 = ((PKP - Rp57,000.000 ,00) x 15/85) + Rp3,000,000 .00
- PKP Rp218,500.000 ,00 - RP406,000,000 = ((PKP - Rp218,500.000 ,00) x 25/75) + Rp31,500,000 .00
- PKP Rp406,000,000 - Rp3,298,100,000 .00= ((PKP - Rp406,000.000 ,00) x 30/70) + Rp94,000,000 .00
- PKP > RpRp3,298,100,000 .00 = ((PKP - RpRp3,298,100,000 .00) x 35/65) + Rp1,701,900,000 .00
For Example, the Net Salarry is Rp10,000,000 and Annual Net Salary is Rp120,000,000 .00:
- Taxable Income (PKP) = Annual Nett Salary - Non-Taxable Income (PTKP) TK/0
Taxable Income (PKP) = Rp120,000,000 .00 - Rp54,000,000 .00
Taxable Income (PKP) = Rp66,000,000 .00 - Tax Allowance (PPh 21) Annual Progresif Rates:
((Rp66,000,000 .00 - Rp57,000.000 ,00) x 15/85) + Rp3,000,000 .00 = Rp4,588,235 .29 - Monthly Tax Allowance (PPh 21):
Rp4,588,235 .29 : 12 = Rp382,352 .94
Second, calculate the Employee PPh 21:
- Monthly Net Salary = Rp10,000,000 + Tax Allowance
Monthly Net Salary = Rp10,382,352 .94
Annual Net Salary = Rp124,588,235 .29 - Taxable Income (PKP) = Annual Nett Salary - Non-Taxable Income (PTKP) TK/0
Taxable Income (PKP) = Rp124,588,235 .29 - Rp54,000,000 .00
Taxable Income (PKP) = Rp70,588,235 .29 - Employee Income Tax (PPh 21) Annual Progresif Rates
5% x Rp60,000,000 = Rp 3,000,000 .00
15% x Rp 10,588,235 .29 = Rp 1,588,235.29
PPh 21 Annual = Rp 4,588,235 .29 - Employee Income Tax (PPh 21) that should paid by Employee:
Rp4,588,235 .29 : 12 = Rp382,353 .94
For some companies, employees' salaries will be calculated based on attendance. So, the employee income tax (PPh 21) will be followed by the salary, which can be different in every month.
Because of that, the company needs to know how to manage the attendance accurately to calculate the PPh 21.
Imagine that you calculate more than 10 employees, manually! It will take time and effort, also high risk of human error when calculating. If you want to be more efficient on managing Attendance, Payroll and Pph 21, you can take advantage of HR Software.
The Importance of HR Management System Apps for Easier Managing Attendance, Salaries and PPh 21
After you know about How to Calculate PPh 21, computing the salary with PPh 21 manually is easy when you only have 3-5 employees. But how does your company already have dozens or hundreds of employees?
No matter how many employees you have, you should actually use software to compute it. A lot of people use Excel or Google Spreadsheet to compute, but still have high risk of human error.
That's why, it's highly recommended for you to use a payroll app that integrates with attendance and time off management professionally.
The first reason for using the Payroll app is to make the HR department task easier and faster to manage the whole company salaries for the employee. The second one is to reduce human error risk and fraud potential that can be done by the employees.
Payroll Apps on Odoo HR Management System by Panemu are the best solution for your company to compute salary, BPJS, PPh 21 that integrate with attendances and leave management. And the computation is automatically based on Indonesian Salary Rules.
Find out more the solutions by clicking the button below!
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