The Bureau of Internal Revenue has released guidelines granting tax exemptions on private sector employees’ retirement benefits and health workers’ income and sickness benefits.
The Covid19 Special Risk Allowance given to private and public healthcare workers directly in contact with coronavirus patients and Actual Hazard Duty Pay given to Human Resources for Health personnel are excluded from gross income, and thus are not subject to income tax.
Also exempted from income tax are compensations for private and public health workers who became infected with Covid19 in the line of duty, which amounts to P1 million in the event of death; P100,000 in case of severe illness; and P15,000 in case of mild or moderate sickness.
Retirement benefits of private-sector employees from June 5 to December 31 this year are also tax-free, as long as the amount received adheres to a retirement plan duly registered with the BIR.
Further, taxes withheld from retirement benefits by private employers will be refunded to the concerned employees.
PHOTO: Tatler Philippines