The Government of the Republic of Indonesia has officially implemented the mechanism for withholding Income Tax Article 21 (PPh 21) using the Average Effective Rate (TER). This rule aims to provide simplicity and ease for both taxpayers and employers in calculating monthly tax deductions.
As an HRD professional or business owner, understanding this new rule is crucial to avoid salary deduction errors that could impact your company's legal compliance.
What Is PPh 21 with the TER Method?
PPh 21 is the income tax on employee salaries that employers withhold and remit each month. With the Average Effective Rate (TER) method, effective from 1 January 2024 based on Government Regulation No. 58 of 2023, monthly tax calculation becomes simple:
The TER percentage is determined by the employee's PTKP status (Category A, B, or C) and the range of monthly gross income. Only in the December tax period does the employer recalculate using the Article 17 rates of the Income Tax Law, then subtract the total tax already withheld from January to November.
Why Is the TER Method Simpler?
Before this rule, monthly PPh 21 calculation was very complex. HR had to account for Position Allowance, PTKP (Non-Taxable Income), and the progressive rates of Article 17 paragraph (1) letter a of the Income Tax Law every month.
With the TER method, only one multiplication step is needed per month for the January - November tax period. This significantly cuts the administrative burden on HR teams and reduces the risk of *human error*.
Average Effective Rate (TER) Categories
TER is divided into three categories based on the taxpayer's PTKP status:
TER Category A:
- For taxpayers with PTKP status: TK/0 (Single without dependents), TK/1 (Single with 1 dependent), and K/0 (Married without dependents).
TER Category B:
- For taxpayers with PTKP status: TK/2, TK/3, K/1, and K/2.
TER Category C:
- For taxpayers with PTKP status: K/3 (Married with 3 dependents).
Each category has its own tariff percentage table based on the employee's monthly gross income range.
Calculation Simulation
Let's take a simple example:
- Employee Name: Budi
- PTKP Status: K/0 (falls under TER Category A)
- Basic Salary + Monthly Allowances: Rp8,500,000 (Gross Income)
Based on the Category A TER table, for gross income above Rp8,000,000 up to Rp8,800,000, the monthly effective rate applied is 1.5%.
So Budi's PPh 21 deduction per month (January - November) is:
Very simple, isn't it? No more deducting position allowances or dividing PTKP per month for the January to November tax period.
Automating PPh 21 with Absyen
Even though the formula looks simpler, manually managing dozens or hundreds of employees with different PTKP statuses in Excel still takes time and risks errors.
This is where a modern HRIS and Payroll system like Absyen matters. The Absyen system is equipped with an automatic PPh 21 calculator that supports the latest TER method:
- Automatic Synchronization: The system detects each employee's PTKP profile and immediately matches it to the correct TER category (A, B, or C).
- Precise Calculation: Gross salary from combined attendance, overtime pay, and allowances is automatically taxed in real time.
- Digital Payslips: PPh 21 deductions are automatically attached to payslips that employees receive directly through the mobile app.
Want to try it? Automated payroll is available starting from the Basic plan. See the Absyen pricing.
Conclusion: The PPh 21 TER method significantly simplifies your monthly tax calculations. Make sure your company quickly transitions to an automated system to minimize administrative errors and save your HR team's valuable time.
Frequently Asked Questions
When did the TER PPh 21 method take effect?
The Average Effective Rate (TER) method took effect for the tax period starting 1 January 2024 based on Government Regulation No. 58 of 2023, which simplifies PPh 21 withholding for tax periods other than December.
How do I determine an employee's TER category?
The category is determined by PTKP status: Category A for TK/0, TK/1, and K/0; Category B for TK/2, TK/3, K/1, and K/2; Category C for K/3. Each category has a tariff percentage based on the range of monthly gross income.
Does Absyen calculate PPh 21 automatically?
Yes. The Absyen system matches each employee's PTKP profile to the correct TER category, calculates deductions from gross salary in real time, and attaches them directly to the digital payslip.