Dissecting Social Security for Labor in PPh 21: Additions vs. Deductions

In the calculation structure of Article 21 Income Tax (PPh 21) for Permanent Employees, the BPJS Ketenagakerjaan (Social Security for Labor) component plays a unique and often confusing role. Unlike basic salary which is definitely a tax object, BPJS Ketenagakerjaan consists of four main programs—Work Accident Security (JKK), Death Security (JKM), Old Age Security (JHT), and Pension Security (JP)—each having different tax treatments depending on who bears the cost.

1. Gross Income Additions: Benefits "Enjoyed" Now

The first basket adds to the gross income. This applies to insurance premiums that provide immediate risk protection and are paid by the employer. In the context of BPJS Ketenagakerjaan, this includes:

• Work Accident Security (JKK)
• Death Security (JKM)

When a company pays JKK and JKM premiums for its employees, tax regulations consider the employee to have received an economic benefit in the form of protection. Therefore, the amount of JKK and JKM premiums paid by the employer must be added to the basic salary and other allowances to form Gross Income.

2. Non-Taxable Objects: Future Savings from the Employer

The second basket consists of contributions paid by the employer but are essentially savings for old age. This includes:

• Old Age Security (JHT) paid by the company.
• Pension Security (JP) paid by the company.

Although the company spends money on these contributions on behalf of the employee, this money is not considered employee income at the present time. The tax is deferred until the employee withdraws the funds upon retirement. Therefore, these components are excluded from the employee's gross income.

3. Gross Income Deductions: Expenses Paid by the Employee

The third basket consists of contributions paid by the employee themselves through salary deductions. This includes:

• Old Age Security (JHT) borne by the employee.
• Pension Security (JP) borne by the employee.

Regulations allow old-age and pension program contributions paid by the employee to serve as deductions from gross income. This means that before income is multiplied by the tax rate, the gross figure is reduced by the JHT and JP contributions deducted from the employee's salary. This reduces the tax base, resulting in a lower PPh 21 payment.

Calculation Example

Let's simulate the PPh 21 calculation for Mr. Budi (Status K/0) with a Basic Salary of Rp10,000,000. Assumed BPJS Ketenagakerjaan rates:

• JKK (paid by company): 0.24% = Rp24,000
• JKM (paid by company): 0.30% = Rp30,000
• JHT (company pays 3.7%, employee pays 2%)
• JP (company pays 2%, employee pays 1%)

Conclusion

In the PPh 21 ecosystem, BPJS Ketenagakerjaan contributions have two faces: JKK and JKM from the company are tax adders (tax objects), while JHT and JP paid by the employee are tax relievers (income deductions). Understanding this distinction is key to precision in payroll administration.

Regulatory References:

• Minister of Finance Regulation Number 168 of 2023 concerning Implementing Guidelines for Withholding Tax on Income in Connection with Work, Services, or Activities of Individual Taxpayers.
• Book "Cermat Pemotongan PPh Pasal 21/26" (DJP, 2024).