The Most Accurate Way to Calculate the Latest Income Tax

Nafa Lightyani

The Most Accurate Way to Calculate the Latest Income Tax

Rancakmedia.com – In this article we will discuss about how to calculate income tax Latest, for those of you who don't know, you can read the article that we have provided below until the end.

A good understanding of how to calculate income tax is very important for every taxpayer.

This can help taxpayers to avoid calculation errors which could result in the payment of fines or administrative sanctions.

In addition, by understanding how to calculate income tax, taxpayers can take advantage of available tax deductions and credits to reduce the amount of tax they have to pay.

What is Income Tax

What is Income Tax

income tax is a tax imposed by the government on income received by a person or business entity.

Income tax is an important source of state revenue and is used to finance various state activities, such as infrastructure, education, health, and so on.

Every citizen or business entity that earns income is obliged to pay income tax.

Income subject to tax can come from various sources, such as salary, honorarium, bank interest, royalties, and so on.

The income tax rate that must be paid depends on the amount of income earned.

Income tax also has strict regulations regarding the submission of SPT (Notification Letter).

Every taxpayer must submit SPT on time and provide accurate income reports.

The government also provides tax deductions and credits to ease the tax burden that must be paid by taxpayers.

Therefore, it is important for every taxpayer to understand how to calculate income tax in order to avoid calculation errors which could result in the payment of fines or administrative sanctions.

In addition, by understanding how to calculate income tax, taxpayers can take advantage of available tax deductions and credits to reduce the amount of tax they have to pay.

Understanding Tax Rates

Tax rate refers to the percentage or number used to calculate the amount of tax that must be paid by taxpayers based on the amount of income earned.

Tax rates are usually regulated by the government and can differ from one type of tax to another.

Tax rates are usually used to determine the amount of tax that must be paid by taxpayers, both individuals and business entities.

Tax rates can vary depending on the type of income earned and the amount of income received.

In general, higher tax rates will apply to higher income. Therefore, taxpayers who have higher income will be subject to higher taxes.

Understanding Tax Rates

The tax rates charged are usually regulated by tax law and supervised by the tax authority.

In understanding tax rates, taxpayers must carefully calculate the amount of income received and the applicable tax rates to avoid calculation errors and paying more tax than has been determined.

Apart from that, taxpayers must also pay attention to applicable tax regulations and consult with tax experts if necessary.

This will help taxpayers determine the amount of tax that must be paid correctly and in accordance with applicable regulations.

Income Tax Rates for Indonesian Citizens

Income tax rates for Indonesian citizens may differ depending on the amount of income received and the tax status of the taxpayer.

The following are the income tax rates applicable in Indonesia for the 2023 tax year:

1. Final Income Tax

The following are the final income tax rates:

  1. Tax rate of 0,5% for income up to IDR 4,8 million per year
  2. Tax rate is 1% for income above IDR 4,8 million to IDR 60 million per year
  3. Tax rate is 2% for income above IDR 60 million to IDR 120 million per year
  4. Tax rate is 5% for income above IDR 120 million to IDR 720 million per year
  5. Tax rate is 7% for income above IDR 720 million per year

2. Income Tax is Not Final

The following are non-final income tax rates:

  • Tax rate of 5% for income up to IDR 50 million per year
  • Tax rate is 15% for income above IDR 50 million to IDR 250 million per year
  • Tax rate is 25% for income above IDR 250 million to IDR 500 million per year
  • Tax rate of 30% for income above IDR 500 million to IDR 1 billion per year
  • 35% tax rate for income above IDR 1 billion per year

Taxpayers can also get various tax deductions, such as deductions for education, health and donation expenses.

Apart from that, taxpayers can also take advantage of the withholding tax system which is imposed on certain sources of income, such as salaries and dividend payments.

In this case, the party paying the income is obliged to withhold tax and remit it to the tax authority.

Income Tax Rates for Indonesian Citizens

Income Tax Rates for Business Entities

Income tax rates for business entities can vary depending on the form of business entity and the amount of income received.

The following are the income tax rates for business entity which applies in Indonesia for the 2023 tax year:

1. Limited Liability Company (PT)

The following are the tax rates for limited liability companies (PT):

  1. Tax rate of 22% for income up to IDR 50 billion per year
  2. 24% tax rate for income above IDR 50 billion per year

2. Cooperative

The following are the final income tax rates:

  • Tax rate of 10% for income up to IDR 4,8 billion per year
  • 20% tax rate for income above IDR 4,8 billion per year

3. Micro, Small and Medium Enterprises (MSMEs)

The following are the MSME income tax rates:

  1. Tax rate of 0,5% for income up to IDR 4,8 billion per year
  2. Tax rate of 1% for income above IDR 4,8 billion to IDR 50 billion per year
  3. Tax rate of 2% for income above IDR 50 billion to IDR 4,8 trillion per year
  4. Tax rate of 3% for income above IDR 4,8 trillion per year

4. Other Business Entities

The following are the income tax rates for other business entities:

  • Tax rate of 25% for income up to IDR 50 billion per year
  • 30% tax rate for income above IDR 50 billion per year

Business entity taxpayers can also obtain various tax deductions, such as deductions for operational and investment costs.

Other business entities

Apart from that, business entities can also take advantage of the withholding tax system on certain sources of income, such as dividends paid to shareholders.

In this case, the business entity is obliged to withhold tax and remit it to the tax authority.

How to Calculate Income Tax Correctly

As a tax-compliant citizen, you should know how to calculate income tax correctly.

The calculation itself refers to all forms of income, be it salary, wages, horarium, allowances, and other payments related to work.

The size of the PPh also depends on the amount of income you earn. The more income, the higher the tax burden that must be borne.

To calculate it, here are the steps you need to understand:

First, you must calculate your net income for one year first. Then, find out how much your Non-Taxable Income (PTKP) and Taxable Income (PKP) are.

After everything is calculated, then you can find out how much PPh must be paid.

1. How to Calculate Net Income in One Year

According to Law no. 36/2008 Article 6, how to calculate personal income tax refers to your income in one year, including allowances. All total income is included in gross or gross income.

Before calculating, from the gross it is necessary to find out how much net income was in one year.

Net income is obtained from the total gross minus mandatory costs such as pension costs, credit or other debts.

2. How to Calculate PTKP (Non-Taxable Income)

After finding out how much your net income is in one year, the next step is to find out PTKP. Later, this PTKP will be used to calculate PKP.

How to Calculate PTKP (Non-Taxable Income)

The amount of PTKP is different for each person, depending on the number of dependent family members. The Director General of Taxes determines the annual PTKP amount as follows:

  1. Individual taxpayers, amounting to IDR 54 million.
  2. The addition for married taxpayers is IDR 4,5 million.
  3. The addition for blood family members (maximum 3 people), is IDR 4,5 million.

3. How to Calculate PKP (Taxable Income)

How to find PKP is quite simple. Once you know the appropriate PTKP amount, you just need to reduce the amount of net income by the PTKP amount. Thus, you can proceed to how to calculate final PPh.

4. How to Calculate PPh (Income Tax) for Indonesian Citizens

After successfully finding each point, the final step is to calculate income tax.

The way to calculate final income tax is based on the percentage that has been successfully found for each point. The final step is to calculate income tax.

The way to calculate final PPh is based on the percentage set by the Director General of Taxes, as follows:

  • PKP under IDR 50 million is subject to PPh of 5%.
  • PKP between IDR 50 million – IDR 250 million is subject to PPh of 15%.
  • PKP between IDR 250 million – IDR 500 million is subject to PPh of 25%.
  • PKP above IDR 500 million is subject to PPh of 50%.

From the calculation above, how to calculate PPh only requires multiplying net income by the appropriate percentage.

For example, if your net income in one year is IDR 100 million, then the PPh charged is 15% of the total income.

Example of Income Tax Calculation Simulation

To clarify how to calculate PPh correctly, the following is an example of a calculation simulation.

Example:

Bayu is a company manager with an estimated net income of IDR 80 million per year. He is not married, so he has no responsibilities on other family members.

Example of Income Tax Calculation Simulation

How much income tax should he pay?

The first step is to calculate the PKP. Because Bayu is not married, he falls into the first category. So, Bayu's PKP is:

PKP
= Net income – PTKP
= IDR 80 million – IDR 54 million
= IDR 26 million

Once the PKP is known, the next step is to calculate the PPh. Because Bayu's PKP is less than IDR 50 million, the PPh charged is 5%. That way, it can be calculated that:

income tax
= IDR 50 million x 5%
= IDR 2,5 million
Based on this calculation, Bayu must pay income tax of IDR 2,5 million per year.

Conclusion

Income tax is a tax imposed by the government on income received by a person or business entity.

That is the information about the most accurate way to calculate the latest income tax, hopefully the article above can be useful and helpful to all of you.

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Nafa Lightyani

I am a content writer for SEO, Technology, Finance, Travel, Cooking Recipes and others. I hope this can be useful for all my friends.