BIR Ruling

April 13, 1977 Mr. Manuel M. Lazaro Sr. Assistant General Manager (Legal & Administration) and General Counsel Government Service Insurance System Manila S i r : This refers to your letter dated January 12, 1977 requesting advice on whether the Government Service Insurance System shall include in Form 1701B for purposes of Section 243 of Revenue Regulations No. 2, as amended by Revenue Regulations No. 8-76, payments made to its members consisting of proceeds from life insurance, retirement annuities and pensions; payments under the Workmen's Compensation and Health Insurance and Medicare Acts, and payments made under the Barrio Officials' Insurance Act. It appears that the following payments by GSIS to its members are exempt from income tax: (a) proceeds from life insurance, retirement annuities and pensions, pursuant to Sections 14 and 28(c) of Commonwealth Act No. 186, as amended, otherwise known as the GSIS Charter; (b) payments under the Barrio Officials Insurance Act (Republic Act No. 4898), pursuant to Section 29(b)(1) and (5) of the Tax Code; and (c) payments under the Workmen's Compensation and Health Insurance and Medicare Acts pursuant to Section 29(b)(5) of the Tax Code. In reply, you are advised that one receiving tax exempt income is not required to report said income in his income tax return. As the purpose for requiring a payors of income or compensation to report the names and addresses of those to whom they paid P1,800.00 or more during a calendar year is to verify whether such payees reported their income for income tax purposes, said purpose would not be served if the income is, by law, exempt from tax. Such being the case, and as the abovementioned life insurance proceeds, retirement annuities, pensions and compensation are, by law, exempt from income tax, GSIS need not report payments thereof in BIR Form 1701B. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8