In the Indonesian payroll ecosystem, the Health Social Security (BPJS Kesehatan) contribution is a mandatory component that often causes confusion regarding taxation. For a Permanent Employee, understanding how this contribution is treated in Article 21 Income Tax (PPh 21) calculation is crucial. Unlike pension contributions which reduce tax liability, BPJS Kesehatan has unique characteristics: one part is a tax object that increases gross income, while the other part cannot be used as a deduction.
The latest tax regulation, specifically Minister of Finance Regulation Number 168 of 2023, provides clear guidelines on how to treat this social security component within the employee's Gross Income structure.
Generally, BPJS Kesehatan contributions are shared between the company and the employee with specific percentages (typically 4% by the employer and 1% by the employee, subject to a salary cap). From the perspective of PPh 21, contributions paid by the employer are considered an addition to the employee's economic capability.
Therefore, Health Security premiums paid by the employer are categorized as an Addition to Gross Income. This means the rupiah value paid by the office to BPJS Kesehatan on behalf of the employee must be added to the basic salary and other allowances before being multiplied by the tax rate. This aligns with the principle that any benefit or facility in the form of insurance premiums paid by the employer is a tax object.
This is where it differs from pension programs. While Old Age Security (JHT) or Pension Security (JP) contributions paid by the employee (salary deduction) are allowed as deductions from gross income (reducing tax), BPJS Kesehatan contributions paid by the employee are NOT allowed as deductions.
In the table of gross income additions and deductions released by the Directorate General of Taxes, it is emphasized that BPJS Kesehatan borne by the employee is not a gross income deduction factor. This means that although the money is deducted from the employee's salary every month and reduces Take Home Pay, fiscally, that money is considered received and remains taxable.
To clarify this concept, let's look at the case of Mr. A, a permanent employee with single status (TK/0).
How do we calculate Mr. A's Gross Income for PPh 21 purposes?
This figure of Rp 6,240,000 is what will then be multiplied by the Average Effective Rate (TER) to determine the monthly tax. Meanwhile, the JHT deduction of Rp 120,000 will only be calculated later as a deduction when calculating net income at the end of the year (Last Tax Period) or when using the Article 17 calculation method.
In calculating PPh 21 for Permanent Employees, tax withholders must carefully sort the BPJS components. The portion paid by the company is "additional money" (taxable) for the employee, while the portion paid by the employee is "private consumption" which does not reduce the tax base. Errors in including or excluding these components can lead to underpayment or overpayment, impacting the company's tax compliance.
tpc.consulting 
tpc.consulting 
info@taxindo.co.id