Publishing Section 45(a) of the National Internal Revenue Code of 1977

August 3, 1977 REVENUE MEMORANDUM CIRCULAR NO. 34-77 SUBJECT : Publishing Section 45(a) of the National Internal Revenue Code of 1977 TO : All Internal Revenue Officers and others concerned For the information and guidance of all concerned, there is quoted below Section 45 of the National Internal Revenue Code of 1977 as promulgated under Presidential Decree No. 1158: "SEC. 45. Individual Returns . (a) Requirements . (1) The following individuals are required to file an income tax return, if they have a gross income of at least P1,800 for the taxable year: "(2) . . . "(3) Notwithstanding the provisions of the preceding paragraphs, an individual (except a non-resident alien engaged in trade or business in the Philippines) whose gross income derived solely from salaries, wages, remuneration and other similar compensation for services rendered, does not exceed his personal exemption of P1,800 if he/she is single or P3,000 if he/she is married or head of the family, plus the optional standard deductions to which he/she is entitled to claim under sub-paragraph (k) of Section 30, is not required to file an income tax return. "(b) . . . "(c) . . . "(d) . . . "(e) . . . "(f) . . . "(g) . . ." FEATURES OF THE AMENDMENT Prior to the amendment, an individual is not required to file an income tax return if his gross income is less than P1,800 for the taxable year. Under the Tax Code of 1977 if the gross income of an individual is (a) derived solely from salaries, wages, remuneration and other similar compensation for services rendered and (b) such gross income does not exceed the individual's personal exemption (as married or single) plus the optional standard deduction which such individual is entitled to claim, he is exempt from filing an income tax return. If the individual derives income from other sources in addition to salaries, wages, remuneration and similar compensation for services rendered, he must still file an income tax return if his aggregate gross income from all sources amounts to at least P1,800, regardless of the amount of his personal exemptions. Examples: (a) If a single individual derives gross income from salaries during the taxable year in the total amount of P2,000, he may determine whether or not he will file an income tax return as follows: Gross income P2,000 ===== Personal exemption 1,800 Add: Optional standard deduction (P2,000 x 10%) 200 Total P2,000 ===== Since the sum of the personal exemption of P1,800 and the optional standard deduction of P200 does not exceed his gross income of P2,000, the individual is not required to file an income tax return. Thus, a single individual with a gross income from salary of P2,000 or less is exempt from filing an income tax return. (b) Suppose a married individual receives a gross income from salaries in the amount of P3,333.33, he may determine whether he is required to file an income tax return as follows: Gross income P3,333.33 ======= Personal exemption 3,000.00 Optional standard deduction (P3,333.33 x 10%) 333.33 Total exemption and OSD P3,333.33 ======= Since the sum of the personal exemption of P3,000 and the optional standard deduction of P333.33 does not exceed his gross income of P3,333.33, the individual is exempt from filing an income tax return. Thus a married person (or head of a family) with a gross income from salary of P3,333.33 or less is exempt from filing an income tax return. The additional exemptions for dependent children shall not be considered by a head of a family or a married individual in determining whether or not he is exempt from filing an income tax return. EFFECTIVITY The aforequoted Section 45 of the Tax Code of 1977 took effect for the calendar year 1977. ENFORCEMENT All internal revenue officers and others concerned are enjoined to give this circular as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8