Whether the P500.00 Additional Compensation Per Month Granted to Government Officials and Employees with Salary Grade up to Grade 25 as Provided under Administrative Order No. 53 is Subject to Income Tax

January 16, 1995 BIR RULING NO. 006-95 21 (a) 000-00 006-95 The Regional Director Revenue Region No. 10 Legazpi City S i r : This refers to your letter dated July 19, 1994 requesting for a ruling as to whether or not the P500.00 additional compensation per month granted to government officials and employees with salary grade up to Grade 25 as provided under Administrative Order No. 53, issued on May 17, 1993, is subject to income tax. llcd In reply, please be informed that the Five Hundred Pesos (P500.00) additional compensation per month granted to government officials and employees beginning May 1, 1993 with salary grade up to Grade 25 under Administrative Order No. 53 is in the nature of compensation as explicitly provided in the first "WHEREAS clause" of the said order. However, Item No. 1 (1.2) of the said Order provides, viz. : "This Administrative Order is issued to extend the same privilege to the rest of the personnel of the government, which shall partake of an allowance and not subject to GSIS, HDMF Fund premiums and income tax deductions pending its formal integration into the basic pay of the subject government personnel ." (emphasis supplied) Such being the case, the said P500.00 additional compensation shall be subject to income tax and consequently to the withholding tax prescribed under Section 72 of the Tax Code, as amended, as implemented by Revenue Regulations No. 6-82, as amended. However, the withholding of the tax thereon shall be made only as of the time of its formal integration into the basic pay of the subject government personnel with salary grade up to Grade 25. LibLex Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue