Request for Exemption from Withholding Tax on Retirement Benefits Received from PDIC

February 15, 1984 BIR RULING NO. 037-84 29 (c)-022-84-037-84 M a d a m : This refers to your letter dated January 20, 1984 requesting exemption from the withholding tax on retirement benefits which you received from the Philippine Deposit Insurance Corporation (PDIC). Documentary evidence submitted show that upon the advice of your physician, you opted to retire under the Early Retirement Incentive Plan of the PDIC for reasons of ill health. In reply, I have the honor to inform you that pursuant to Section 29(c)(7)(B) of the Tax Code, as amended, any amount received by an official or employee of by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee is exempt from income tax. Moreover, under Section 29(c)(7)(F) of the Tax Code, as amended, benefits received from the GSIS and the retirement gratuity received by government officials and employees are exempt from income tax. In view thereof, this Office is of the opinion as it hereby holds that any and all amounts you received from the PDIC as a result of your separation from the service of the corporation due to sickness are exempt from all taxes and consequently, from withholding tax prescribed by Section 91, Chapter XI, Title II of the Tax Code, as amended by Batas Pambansa Blg. 135 and implemented by Revenue Regulations No. 6-82. It is, however, understood that this tax exemption does not include payments for your salary and cash equivalent of your accumulated vacation and sick leaves, if any. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner