Regulation Update
PMK 168 Year 2023 Issued on the Technical Aspects of Income Tax Withholding for ITA 21: A Detailed Description

Tuesday, 23 January 2024

PMK 168 Year 2023 Issued on the Technical Aspects of Income Tax Withholding for ITA 21: A Detailed Description

The enactment of the Income Tax (ITA) Article 21 calculation formula with the Effective Rate (TER) mechanism has an impact on the amendment of technical provisions or guidelines for the implementation of income tax withholding related to the work, services or activities of individual taxpayers. 

The provisions regarding the use of the TER formula for Income Tax Article 21 were previously contained in Government Regulation (PP) Number 68 of 2023, which took effect on 1 January 2024. In the regulation, the government applies TER ITA 21 for monthly and daily income. 

Meanwhile, changes to the implementation instructions are contained in Minister of Finance Regulation (PMK) Number 168 of 2023 which at the same time revokes some of the PMK Number 68/PMK.03/20010, 197/PMK.03/2013 and 99/PMK.03/2018. 

In general, the mechanism for withholding ITA 21 regulated in PMK 168 of 2023 includes income tax rates for income received by permanent employees, retirees, members of the board of commissioners or members of the supervisory board receiving irregular income, non-permanent employees, non-employees, activity participants, pension plan participants with employee status and former employees. 

Just a reminder, the method of calculating TER PPh 21 is divided into Monthly TER and Daily TER. Monthly TERs are divided into three categories, Category A, Category B and Category C based on the status of Non-Taxable Income (PTKP), with details as follows: 


Non-Taxable Income

Monthly TER A 

TK (Not Married)/0 (IDR 54 million) 

TK/1 and K(Married) /0 (IDR 58.5 million)  

Monthly TER B  

TK/2 and K/1 (IDR 63 million) 

TK/3 and K/2 (IDR 67.5 million) 

TER Monthly C  K/3 (72 million) 

Meanwhile, the Daily TER is differentiated based on the amount of gross income received, as follows: 

  • Gross Income ≤ Rp 450,000, TER ITA 21 0% 
  • Income > 450,000 - Rp 2,500,000, using TER Income Tax 0.5% 

ITA 21 of Permanent Employees 

Permanent employees are employees who receive or earn income regularly, including members of the board of commissioners and members of the supervisory board.  Also, employees who work on a contract basis for a certain period. 

The income of permanent employees who are the object of ITA 21 includes income received regularly or irregularly. Regular income includes all salaries, allowances, overtime and similar income. While irregular income such as bonuses, holiday allowances, production services, tantiem, gratuities, premiums and other irregular income. 

Then, the basis for imposition and withholding of ITA 21 for permanent employees includes gross income for each tax period or taxable income. While the rates used to calculate ITA 21 for permanent employees are: 

  • The monthly effective rate for calculating ITA 21 in each period, except for the last tax period. 
  • The rate of Article 17 paragraph (1) of the Income Tax Law to calculate ITA 21 in the last tax period. 

ITA 21 of the Board of Commissioners and Supervisory Board 

The basis for imposition and withholding of ITA 21 for members of the board of commissioners and supervisory board is gross irregular income in one tax period. While the rate used is the monthly effective rate. 

ITA 21 of Non-permanent Employees 

Included in non-permanent employees are casual workers who only receive income when they work, based on the number of days, units of work or completion of a job requested by the employer. 

The object of ITA 21 for non-permanent employees is in the form of daily, weekly, unit, piecework and wages received or earned on a monthly basis. The calculation of ITA 21 payable to non-permanent employees includes: 

  • Daily income up to IDR 2,500,000: Daily effective rate X gross value according to gross value 
  • Daily income above IDR 2,500,000: 50% of the gross amount X the rate of Article 17 of the Income Tax Law. 
  • Monthly income: monthly effective rate X gross amount 

ITA 21 of Non-Employees 

Included in the non-employee group is someone other than permanent employees and non-permanent employees who earn income by any name and form in exchange for free work for services. 

Income received by non-employees includes honorarium, commission, fee and similar rewards. On these incomes, ITA 21 will be payable, which is calculated using the formula: Rate of Article 17 of the Income Tax Law multiplied by the tax base (50% of total gross income).

The provisions regarding ITA 21 for non-employees in this regulation also eliminate the concept of continuous income or not. Thus, all income received by non-employees is treated the same. 

ITA 21 of Activity Participants 

Activity participants are individuals who receive or obtain compensation because they are participants in an activity and not because of a job. For example, participants in competitions, meetings, conferences, sessions, meetings, work visits, seminars, workshops, performances, education, training and internships. 

Income received by activity participants includes pocket money, representation, meeting fees, honorarium, prizes or awards and similar rewards. The calculation of ITA 21 payable to activity participants is calculated using the formula: Total Gross Income X Rate of Article 17 of the Income Tax Law. 

ITA 21 for Pension Plan  Participants 

Pension benefits or similar income received by pension plan participants who are employees are the object of Income Tax Article 21. Except for pension and old-age contributions paid to pension funds whose establishment has been approved by the Minister of Finance or obtained permission from the Financial Services Authority, the Social Security Agency for Employment or the Old Age Allowance  Agency. 

ITA 21 payable on income received by the pension plan is calculated using:The rate of Article 17 of the Income Tax Law X Gross Income. 

Former Employees 

Included in the category of income received by former employees include compensation for production services, tantiem, gratuities, bonuses, and other irregular rewards. The income is payable to ITA 21 which is calculated in the following manner: Rate of Article 17 of the Income Tax Law X Gross Income. 

ITA 21 of State Apparatus 

Income received by state apparatus both civilian and military, including state officials, Civil Servants (PNS), Indonesian National Army (TNI), Indonesian National Police (Polri), and retirees is withheld with ITA 21. 

The calculation of ITA 21 for state apparatus uses TER for each tax period, other than the last tax period as for the last tax period using the tariff of Article 17 of the Income Tax Law. (ASP/KEN)


Global Recognition
Global Recognition | Word Tax     Global Recognition | Word TP
Contact Us

MUC Building
Jl. TB Simatupang 15
Jakarta Selatan 12530

+6221-788-37-111 (Hunting)

+6221-788-37-666 (Fax)

Graha Pena 15th floor
Jl. Ahmad Yani 88
Surabaya 60231

+6231-828-42-56 (Hunting)

+6231-828-38-84 (Fax)


For more updates and information, drop us an email or phone number.

© 2020. PT Multi Utama Consultindo. All Rights Reserved.