Whether the Rice Subsidy Does Not form Part of the Employees Yearly Income and Therefore Exempt from Income Tax

February 14, 1991 BIR RULING NO. 028-91 28 012-90 028-91 Gentlemen : This refers to your letter dated October 30, 1990 requesting for clarification regarding the following: 1. Whether the rice subsidy does not form part of the employees yearly income and therefore exempt from income tax; and 2. Whether the NSC can opt to request the BIR for tax credit certificate in NSC's name instead of preparing individual refunds checks to NSC employees concerned; and in this regard NSC can ask the NSC Labor Union President to execute a Deed of Assignment to NSC. In reply, please be informed that as held by this Office in BIR Ruling No. 012-90, the rice subsidy given by the National Steel Corporation (NSC) to all its rank and file employees is not compensation income subject to withholding tax, the same being a privilege of relatively small value given by the employer for the purpose of promoting the health, goodwill, contentment or efficiency of its employees (Revenue Regulations No. 12-86, as amended). Accordingly, the said rice subsidy shall not form part of the yearly taxable compensation income of your employees. Anent the claim for refund or tax credit of alleged withheld tax on the money value of the rice subsidy of the concerned employees, please be informed that under Section 204(3) of the Tax Code, the written claim for refund/tax credit must be filed by the individual taxpayer within two (2) years from date of actual remittance of the withheld tax. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner