Question & AnswerQ&A (Republic Act No. 7833)
The main purpose of Republic Act No. 7833 is to exclude certain benefits such as 13th month pay and other specified benefits from the computation of gross compensation income for the purpose of determining taxable compensation income, amending Section 28(b)(8) of the National Internal Revenue Code.
Section 28(b)(8) of the National Internal Revenue Code, as amended, is the section that is amended by RA 7833.
The benefits excluded include: (i) Benefits received under Republic Act No. 6686, (ii) Benefits received under Presidential Decree No. 851, as amended by Memorandum Order No. 28, (iii) Benefits received by employees not covered by PD No. 851, and (iv) Other benefits such as productivity incentives and Christmas bonus up to P12,000 integrated into the 13th month pay, with the total exclusion capped at P30,000.
The exclusion applies only to the first Thirty Thousand Pesos (P30,000) of the benefits received.
The exclusion provisions apply to benefits paid or accrued beginning January 1, 1994.
Withholding agents are authorized not to deduct the withholding taxes in the immediately succeeding payroll periods to reimburse officials or employees for amounts previously withheld from the benefits.
The Secretary of Finance, upon the recommendation of the Commissioner of Internal Revenue, shall promulgate necessary rules and regulations for the effective implementation of the Act's provisions.
Yes, all laws, decrees, orders, rules, regulations, and other issuances inconsistent with this Act are repealed or amended accordingly.
RA 7833 took effect fifteen (15) days after its complete publication in the Official Gazette or in any two newspapers of general circulation, whichever came earlier.
The exclusion covers officials and employees of national and local governments receiving benefits under RA No. 6686, employees covered or not covered by Presidential Decree No. 851, and employees receiving other specified benefits like productivity incentives and Christmas bonuses within specified limits.