Introduction
Income Tax Article 21, commonly known as PPh 21, is a tax imposed on income received by individuals, including employees, workers, and certain service providers.
For employees, PPh 21 is generally deducted directly by the employer and remitted to the tax authorities on behalf of the employee.
To calculate PPh 21 correctly, it is important to understand:
- gross income,
- allowable deductions,
- non-taxable income (PTKP),
- taxable income,
- and the applicable tax rates.
This chapter explains the basic concepts and calculation process using a simple example.
What Is PTKP?
PTKP stands for Penghasilan Tidak Kena Pajak, or Non-Taxable Income.
PTKP represents the portion of income that is exempt from income tax.
The amount of PTKP depends on a person's marital status and number of dependents.
PTKP Rates (2016)
Progressive PPh 21 Tax Rates
After determining taxable income, tax is calculated using progressive rates.
| Taxable Income Layer | Tax Rate |
| Up to Rp50,000,000 | 5% |
| Above Rp50,000,000 – Rp250,000,000 | 15% |
| Above Rp250,000,000 – Rp500,000,000 | 25% |
| Above Rp500,000,000 | 30% |
Steps to Calculate PPh 21
The basic calculation process consists of several steps.
Step 1: Calculate Gross Income
Gross income includes:
- basic salary,
- overtime payments,
- allowances,
- bonuses,
- and other taxable compensation.
Step 2: Calculate Allowable Deductions
Common deductions include:
Position Allowance (Biaya Jabatan)
- 5% of gross income
- Maximum Rp500,000 per month
- Maximum Rp6,000,000 per year
Pension Contributions
Employee pension contributions may be deducted according to applicable regulations.
JHT Contributions
Employee contributions to the Old Age Security Program (JHT) may also be deductible.
Step 3: Calculate Net Income
Net Income = Gross Income − Allowable Deductions
Step 4: Annualize Net Income
For permanent employees, monthly net income is generally multiplied by 12 months to determine annual net income.
Step 5: Deduct PTKP
Taxable Income = Annual Net Income − PTKP
Step 6: Apply Tax Rates
The applicable tax rates are applied to the taxable income to determine annual PPh 21.
Step 7: Calculate Monthly Tax
Monthly PPh 21 = Annual PPh 21 ÷ 12
Example of PPh 21 Calculation
Assume the following employee information:
Employee Profile
Name: Andi
Marital Status: Married with 3 Dependents (K/3)
Basic Salary: Rp5,000,000 per month
Overtime Income (July): Rp3,000,000
Employee Pension Contribution: Rp50,000
Employee JHT Contribution: Rp 100.000
Step 1: Calculate Gross Income
| Description | Amount (Rp) |
| Basic Salary | 5,000,000 |
| Overtime | 3,000,000 |
| JKK Premium Paid by Employer | 12,000 |
| Death Benefit Premium Paid by Employer | 15,000 |
| Gross Income 8.027.000 |
Step 2: Calculate Deductions
Position Allowance
5% × Rp8,027,000
= Rp401,350
Employee JHT Contribution
= Rp100,000
Pension Contribution
= Rp50,000
Total Deductions
Rp401,350 + Rp100,000 + Rp50,000 = Rp 551,350,-
Step 3: Monthly Net Income
Rp8,027,000 − Rp551,350 = Rp 7.475.650,-
Step 4: Annual Net Income
Rp7,475,650 × 12 = Rp 89.707.800
Step 5: Deduct PTKP
PTKP Status K/3
= Rp72,000,000
Taxable Income:
Rp89,707,800 − Rp72,000,000 = Rp 17.707.800
Step 6: Round Taxable Income
Taxable income is rounded down to the nearest thousand rupiah.
Rp17,707,800
becomes Rp 17.707.000
Step 7: Calculate Annual Tax
Because taxable income is below Rp50,000,000:
PPh 21 = 5%
Annual Tax:
5% × Rp17,707,000
= Rp 885, 350
Step 8: Calculate Monthly PPh 21
Rp885,350 ÷ 12
= Rp73,779
Therefore:
Monthly PPh 21 = Rp 73,779
If the Employee Does Not Have an NPWP
Tax is increased by 20%.
Rp73,779 × 120%
= Rp88,535
Monthly tax payable: Rp 88,535
Important Notes
Overtime and Other Allowances
Additional income such as:
- overtime pay,
- transportation allowance,
- communication allowance,
- meal allowance,
- and other benefits
are generally included in gross income calculations.
Position Allowance Limitation
The maximum deductible position allowance is:
- Rp500,000 per month
- Rp6,000,000 per year
Annualization for New Employees
If an employee starts work during the year, annual income is adjusted based on the remaining months.
For example:
If employment begins in May:
May–December = 8 months
Annualized income is calculated using 8 months rather than 12 months
Why PPh 21 Matters
PPh 21 serves several important purposes:
- supporting government revenue,
- financing public services,
- ensuring tax compliance,
- and creating fairness in the taxation system.
Understanding how PPh 21 is calculated helps employees:
- verify payroll deductions,
- plan personal finances,
- understand tax obligations,
- and avoid future tax issues
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