Question

Enumerate allowable deductions and explain the kinds of personal exemptions allowed bases on "Train" Law

Answer 1

On December 19, the current administration rolled out what it touted as its early Christmas gift to Filipinos: Republic Act (RA) No. 10963, or the Tax Reform Act for Acceleration and Inclusion (TRAIN). Congress approved and ratified the final version of the reform after the bicameral conference committee reconciled the conflicting provisions of the versions of the House of Representatives (House Bill No. 5636) and the Senate (Senate Bill No. 1592).main itention of this is to update our income tax reforms,because it is one of the major source of income to the government

This new law also removed the personal exemption of P50,000 and additional exemption of P25,000. Further, the deductibility of premium payments on health and/or hospitalization insurance was eliminated. This means that individual income earners will be taxed on gross basis, without regard for their status.

First in the list of reforms is the updated Section 24 of the National Internal Revenue Code (NIRC), which provides the revised income tax rates for individuals. From January 1, 2018 to December 31, 2022, the income tax rates for individual taxpayers will be replaced with 0 percent-35 percent progressive tax rates, from the existing 5 percent-32 percent graduated tax rates, with the number of tax brackets reduced from seven to six, and thresholds for each tax bands adjusted.

Under the TRAIN law, individual taxpayers earning an annual salary of P250,000 will fall into the lowest tax bracket, and their income will be subject to 0 percent income tax rate, while the tax rate applicable to those earning above P8 million will be raised from 32 percent to 35 percent.