BIR Ruling [DA-007-97]

January 9, 1997 BIR RULING [DA-007-97] Memorandum For: The Chief, Appellate Division Returned to you herewith are the papers of P/CINSP RUFINO DERLA ESCOTE (DSC), a member of the Philippine National Police (PNP), married with three qualified dependents, relative to his claim for refund of alleged overpaid/erroneously paid income tax for the year 1995. Documents show that the total compensation received by the taxpayer for the taxable year 1995 was P124,548.00 inclusive of salary differential, longevity pay, cost of living allowance and hazard pay, and a tax due of P12,069.12. The amount of P5,280.00 was withheld by the PNP, and the additional amount of P2,000.00 as partial payment for the balance of income tax due of P6,789.12 per return was paid and remitted to this Office under BCS No. 96-00001 dated March 1996. Pursuant to Section 71 of R.A. 6975, otherwise known as "An Act Establishing the Philippine National Police under a reorganized Department of the Interior and Local Government (DILG) of 1990", these uniformed men in the DILG are entitled to a longevity pay of ten percent (10%) of their basic monthly salaries for every year of service from date of their original appointment in the PNP, which in no case shall exceed 50% of the basic pay and also subsistence allowance, quarters allowance, clothing allowance, cost of living allowance and all other allowances as provided by existing laws. Further, Section 77 provides that all benefits, i.e., longevity and allowances granted under R.A. 6975 is not subject to attachment, levy, execution or any tax of whatever nature. Such being the case, amounts received by members of the PNP consisting of longevity pay, cost of living allowance and hazard pay, are benefits exempt from tax under Section 71 of R.A. 6975. Accordingly, a recomputation of the income tax due from Mr. Escote for the year 1995 should be made for the purpose of determining the tax base, which shall be the net taxable compensation, viz, the basic salary and the salary differential, exclusive of the benefits allowed under RA 6975, received during the taxable year less allowable personal and additional exemptions. cdt Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant/Director (Legal Service)