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Payroll Accounting Deductions

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9 views

Payroll Accounting Deductions

Uploaded by

Andrew charl Aban
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PAYROLL ACCOUNTING

DEDUCTIONS FROM GROSS PAY


DEDUCTION
FROM GROSS PAY
A deduction from gross pay
refers to the amount of
money withheld from the
employee’s pay.
GENERALLY, THE PAYMENT OF
EMPLOYEE’S EARNINGS IS
SUBJECT TO DEDUCTION,
WHICH IS:
Withholding income tax

PhilHealth Premium

Pagibig Contribution

SSS or GSIS Premium


OTHER DEDUCTIONS
VALES UNION DUES PENSION FUND

is an amount deducted from is the amount deducted from some employers provide a
gross pay due to salary/ gross pay when the place of retirement / pension
wage advance made by an business has union to fund, and the employees
employee. represent the employees. The contribute additional funds if
deduction may be based on they wish.
the agreement between the
union and the management
to deduct the union dues
from the employee`s pay.
OTHER DEDUCTIONS
CHARITABLE CONTRIBUTIONS CREDIT UNION/COOPERATIVES

many employers allow charitable if the business has a credit union,


contribution to be made through either savings or loan repayment can
payroll deductions be made through payroll
deduction
WITHHOLDING INCOME TAX
Section 57B of the National Internal
revenue Code (R.A. 8424) requires the
employer to withhold portion of salaries
earned by employees that will at least
approximate the income tax due of
the earner relative to the income earned.

Example: An employee’s salary per month


is P35,000. His withholding income tax is
computed on the next slide.
ILLUSTRATIVE PROBLEM
The approximate amount of tax to be withheld could be calculated as follows:

Monthly gross pay P35,000

Multiply by number of months in a year 12

Annual gross pay P420,000

Estimated annual tax per individual income


P26,500
tax rate (See graduated income tax rates)

Divided by number of months in a year 12

Approximate monthly withholding tax P2,208.33

This problem uses the 2023 Graduated Income Tax Table


GRADUATED INCOME TAX TABLE
GRADUATED INCOME TAX TABLE
NET PAY AFTER WITHHOLDING
INCOME TAX
The net income compensation
payment to the employee with no
other deductions would be P32,791.67,
computed as follows:

Gross Pay P35,000

Less: Withholding
Income Tax (WIT)
(2,208.33)

Net Pay P32,791.67


SEMI-MONTHLY BASIS
If the payment were on a semi-
monthly basis, withholding tax is
normally deducted from the payroll
for the second half of the month.

SECOND HALF NET PAY:

Gross Pay
P17,500
(P35,000/2)

Less: Withholding
Income Tax (WIT)
(2,208.33)

Net Pay P15,291.67


DEDUCTIBLE MEMBERSHIP FEES
Private employees, who are not over 60 years old, whether
permanent, temporary or provisional are subject to compulsory
coverage of the SSS, Philhealth, and Pag-ibig deductible
membership.
SOCIAL SECURITY
SYSTEM (SSS)
Navigate the SSS Contribution Schedule
here:

https://www.sss.gov.ph/sss/DownloadCont
ent?fileName=2023-Schedule-of-
Contributions.pdf
PHILIPPINE
HEALTH
INSURANCE
CORP.
*Premium contribution rate
remains at 4% for CY 2023
in view of the suspension of
premium adjustment as
ordered by President
Ferdinand R. Marcos, Jr.

Monthly Premium is
divided equally between
the employer and the
employee.
HDMF/PAG-IBIG CONTRIBUTION
RATES/TABLE FOR 2024
ILLUSTRATIVE PROBLEM
For example, an employee earned total salary of P20,000 for the month. The
corresponding computation pertaining to the deductible membership based on the
tables given would be:

Cotribution Employee’s Employer’s

SSS P900 P1,930

PHIC P500 P500

P200 P200
HDMF
(maximum) (maximum)

Total P1,600 P2,630

This problem uses the 2024 rates


ILLUSTRATIVE PROBLEM - CONT.
The deductible membership fees are normally deducted from payroll for the first half
of the month.

FIRST HALF NET PAY:

Gross Pay
P10,000
(P20,000/2)

Less: Employee’s
Share
P(1,600)

Net Pay P8,400

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