Personnel Economic Relief Allowance Granted to Government Employees is taxable Income

January 13, 1992 BIR RULING NO. 019-92 21 (a) 152-91, 240-91 019-92 Concerned Employees of the Bureau of Agricultural Statistics Kagawaran Ng Pagsasaka BEN-LOR Bldg., 1184 Quezon Avenue Quezon City Gentlemen : This refers to your letter dated November 12, 1991 requesting that the Personnel Economic Relief Allowance (PERA) be not subject to income tax and consequently to withholding tax. In reply, please be informed that this Office has consistently ruled that PERA is considered remuneration/compensation for services performed by the employees for the employer. Such being the case, PERA granted to all employees of the national government, local government units, including government-owned or controlled corporations is taxable income subject to the withholding tax under Section 2(2)(a) of Revenue Regulations No. 6-82 as amended by Revenue Regulations No. 12-86. Please find enclosed a copy of our clarificatory letter dated September 30, 1991 to the Honorable Secretary, Department of Budget & Management regarding PERA and RATA, for your information and guidance. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner of Internal Revenue