PERA Granted to Government Employees is Taxable Income

September 10, 1991 BIR RULING NO. 182-91 21 (a) 72 132-91 62-91 182-91 S i r : In reply to your letter dated July 23, 1991, please be informed that Personnel Economic Relief Allowance (PERA) granted to all employees of the National Government, local government units, including government-owned or controlled corporations, is considered remuneration/compensation for services performed by the employees for the employer, hence, 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. (BIR Ruling No. 132-91) PERA is different from representation and transportation allowances (RATA) granted under Section 34 of the General Appropriations Act to certain officials and employees of the government from the rank of Department Secretaries down to Division Chiefs in the sense that RATA is in fact a reimbursement for the expenses incurred in the performance of one's duties rather than as an additional compensation and therefore is not subject to withholding tax under Section 2(2) (c) of Revenue Regulations No. 12-86 as amended. However, although the amount of RATA is not subject to withholding tax, the excess of RATA, if not returned to the employer, constitutes taxable income which should be declared in the recipient's income tax return for the year in which the RATA was received by him. (BIR Ruling No. 062-91). Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner Officer-in-Charge