The Optional Standard Deduction (OSD) is a flat-rate deduction that self-employed individuals and professionals in the Philippines can choose to claim against their gross sales or receipts to reduce their taxable income. Here's how to compute the tax using the Optional Standard Deduction (OSD):
Determine Gross Sales or Receipts:
Calculate your total gross sales or receipts from your business or profession for the taxable year. This includes all income earned before any deductions.
Compute the Optional Standard Deduction (OSD):
For individuals, the OSD is a flat-rate deduction of 40% of gross sales or receipts.
Multiply the gross sales or receipts by 40% to determine the OSD.
Determine Taxable Income:
Subtract the OSD from the gross sales or receipts to arrive at the taxable income subject to income tax.
Apply the Applicable Tax Rate:
Determine the applicable tax rate based on the taxable income. The Philippines uses a progressive tax system with different tax rates for different income levels.
Refer to the BIR tax rate schedule or tax tables to determine the exact tax rate applicable to your taxable income.
Compute Income Tax Due:
Multiply the taxable income by the applicable tax rate to calculate the income tax due.
File and Pay Income Tax:
File your income tax return (ITR) using the appropriate BIR form for individuals (e.g., BIR Form 1700).
Pay the computed income tax due to the BIR on or before the deadline for filing and payment, which is typically on or before April 15 of the following year.
By following these steps and ensuring accurate computations, you can determine the income tax due using the Optional Standard Deduction (OSD) in the Philippines.
Pwede po bang maglagay din kayo ng sample computation dito? Thank you po!
ردحذفBIR Form 1700 is for purely compensation income earners. Moreover, for corporation, basis for re computation of 40%OSD is gross business income and not gross sales.
ردحذفإرسال تعليق