BIR Ruling [DA-018-98]

January 27, 1998 BIR RULING [DA-018-98] Quedancor Department of Agriculture Ablaza Bldg., 117 E. Rodriguez Sr. Avenue Quezon City Attention: Mr . Galo B . Garchitorena President Gentlemen : This refers to your letter dated December 11, 1997 requesting for confirmation of your opinion that the following are not subject to income tax, viz: cdll 1. Gratuity pay given by your Office, QUEDANCOR, formerly QGFB, to the retiring officers/employees (with 20 or more years in the government service) in addition to the benefits received from GSIS; and 2. Gratuity or separation pay given to employees who have resigned after five (5) years in the service. In reply, please be informed as follows: 1. Pursuant to Section 32(B)(6)(f) of the Tax Reform Act of 1997, benefits received from the GSIS and retirement gratuity received by government officials and employees shall not be included in gross income and shall be exempt from taxation under Title II of the Tax Code, as amended . Such being the case, the gratuity pay received by each of your employees who have been in the service for 20 years or more is exempt from income tax and consequently, from withholding tax as prescribed under Section 79 of the Tax Reform Act of 1997 (then Section 72, Chapter 10, Title II of the Tax Code, as amended by B.P. Blg. 135 and implemented by Revenue Regulations No. 6-82, as amended). 2. However, gratuity or separation pay received by your employees who have resigned after five (5) years in the service are not exempt from income tax, since their separation from the service were initiated by them. (BIR Ruling No. 107-97 dated September 29, 1997) LibLex This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)