SHS

Business Mathematics
Quarter 2, Week 4 – Module 9
Standard Payroll Deductions-
ABM_BM11SW-Ile-7

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Business Mathematics – SHS
Quarter 2, Week 4- Module 9: Standard Payroll Deductions

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Regional Director: Gilbert T. Sadsad

Assistant Regional Director: Jessie L. Amin

Development Team of the Module

Writer: OLIVIA B. BERNARDEZ - ABM Teacher , Tabaco NHS

Editors: NERISSA A. MORTEGA - HT III, San Lorenzo NHS
JULMA B. CARGULLO - MT, TNHS
HILDA J. CARLET - MT, TNHS
Language Editors: CHERRY BASILLA - TNHS
DESIREE CANICULA - TNHS
Reviewers: DIOLETA B. BORAIS – EPS, Tabaco City
JINKY VILLAREAL – EPS, Iriga City
JONJON MONTER – Principal, Sagrada HS, Iriga City
LOYD BOTOR - EPS, RO V
Layout Artist: ROWENA B. BENOYO - San Lorenzo NHS

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 Business Mathematics – SHS
Quarter 2, Week 4- Module 9
Standard Payroll Deductions

INTRODUCTION

An employee's take home pay is not his or her gross earnings. There
are certain deductions in the payroll that are allowable. What he or she takes
home is what we call as the net earnings.

OBJECTIVE
.

After going through this module, you are expected to enumerate the
standard deductions with the corresponding computations.

VOCABULARY

Term Definition/Description

Withholding tax on compensation a tax withheld from income payments

to individuals arising from an
employer-employee relationship

PhilHealth Contributions intended for employees and their

beneficiaries should they have
problems with their health

Pag-IBIG Fund also known as the Home

Development Mutual Fund (HMDF);
provides a national savings and
affordable shelter financing for the
Filipino workers

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Gross Earnings the amount earned by an employee
or wage earner before diminishing
the taxes, benefits, loans and other
possible deductions

Deductions the amount held by authority as a

form of payment for some necessary
dues like taxes, loans, etc.

Net Earnings this is the amount that remained after

subtracting all the deductions

PRE-TEST

Let’s check the amount of knowledge that you already have regarding
the lessons in this module. Choose the letter of the best answer. Write the
chosen letter on a separate sheet of paper.

1. This is the Home Development Mutual Fund (HMDF) which provides

national savings and affordable shelter financing for the Filipino workers.
A. Pag-IBIG Fund B. PhilHealth C. SSS D. GSIS
2. This is intended for employees and their beneficiaries should they have
problems with their health.
A. Pag-IBIG Fund B. PhilHealth C. SSS D. GSIS
3. Janine is a secretary to the president and the company and receives a
monthly salary of ₱ 20,000.00 . She is granted the following: transportation
allowance of ₱ 2,000.00 ; load allowance of ₱ 1,500.00 ; and a laundry
allowance of ₱ 800.00. Compute for her total taxable income.
A. ₱ 24,300.00 B. ₱ 23,800.00 C. ₱ 23,500.00 D. ₱ 20,000.00
4. Ric is a front desk officer with a basic salary of ₱ 10,000.00 a month. His
deductions are: 3.63% for SSS based on his basic monthly pay; ₱ 100.00
for PhilHealth; Pag-Ibig is 2% and 10% withholding tax based on his gross
earnings. Compute for his net pay.
A. ₱ 11,663.00 B. ₱ 8,337.00 C. ₱ 7,337.00 D. ₱ 1,663.00

How was it? If you got all the answers correctly, congratulations! You are
one step ahead but you may still proceed and learn more. If not, it’s ok. This is
developed for you to learn and relearn while having fun.

So let’s start!

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Learning Activity 1

Mary Ann graduated with a bachelor’s degree in Accountancy. She

works in a private company as Junior Accountant. Her salary is
₱22,500.00. What are the deductions included in her payroll?

Standard Payroll Deductions

There are certain deductions from gross earnings to arrive at an

employee’s net earnings or what we call take-home pay. These deductions
may include, among others, the following:

1. Employee’s SSS contribution for private employees

⮚ All employees of private companies are covered by the Social

Security System (SSS). However, self-employed individuals may
also become members.
⮚ The current SSS contribution rate is 11% of the monthly salary
credit not exceeding ₱ 16,000 and is shared by the employer
(7.37%) and the employee (3.63%).
2. Employee’s GSIS contribution for government employees

⮚ All government employees holding permanent and non-permanent

positions are members of GSIS
⮚ Premium contributions are based on monthly compensation

3. PhilHealth contribution for all employees

⮚ All employees are to be members of PhilHealth. This is intended for

health purposes of the members and their beneficiaries.
⮚ A premium contribution table is provided by PhilHealth, and as to
the employer-employee share, they both share equal amount
depending on the salary base of an employee

4. Withholding taxes for all employees

⮚ This is the tax withheld from income payments to individuals arising

from an employer-employee relationship
⮚ All allowances exceeding the mentioned amounts are all taxable

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 5. Pag-IBIG Fund Contribution

⮚ This is Home Development Mutual Fund (HMDF) but also known as

the Pag-IBIG Fund
⮚ Under RA 9679, membership to this fund is mandatory for all
employees
⮚ A person who earns more than ₱ 1,500.00 a month will contribute
2% of his/her salary and so does the employer

To answer the above question regarding Mary Ann who works in a private
company, below are the deductions included in her payroll:
A. SSS Contribution- since Mary Ann works in a private company
B. Philhealth Contribution
C. Withholding taxes
D. Pag- IBIG Fund Contribution

Learning Activity 2

Computation of Deductions
Taxable Income
Example 1:

Every employee in a certain company is given a Christmas bonus

amounting to ₱ 7,500.00 and a laundry allowance of ₱ 500.00 for one year. If
one employee’s basic monthly salary is ₱ 12,800.00 , how much is his/her total
taxable income?

Solution:
Basic Salary: ₱ 12,800.00
Christmas Bonus: ( ₱ 7,500.00−5,000.00 )=₱ 2,500.00
Total taxable income: ₱ 15,300.00

Take note:
Non-taxable Christmas bonus should not exceed ,
and since laundry allowance should not exceed per
month, the given for one year is not taxable.
Taxable Income
6 = Gross Earnings–Total
Deductions
Example 2:

Compute for the taxable income of an employee with the following

data:
Basic Salary: ₱ 15,000.00
Overtime Pay: ₱ 2,800.00
Late/Undertime deduction: ₱ 300.00
SSS Contribution: ₱ 330.00
PhilHealth Contribution: ₱ 187.50
Pag-IBIG Contribution: ₱ 300.00

Solution:
Step 1: Add all the income:
Basic Salary ₱ 15,000.00
Overtime Pay 2,800.00
Gross Earnings ₱ 17,800.00

Step 2: Add all the deductions:

Late/Undertime ₱ 300.00
SSS Contribution 330.00
PhilHealth 187.50
Pag-Ibig 300.00
Total Deductions ₱1,117.50

Step 3: Subtract the total deductions from the gross earnings

Gross Earnings ₱ 17,800.00

Total Deductions 1, 117.50
Taxable Income ₱ 16, 682.50

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 To compute for the taxable income, we have
Taxable Income = Gross Earnings–Total
Deductions

Learning Activity 3

Computation of Net Pay

Jessa is a sales representative with a basic salary of

₱ 12,500.00 a month and a 2% commission on her sales. For this month,
she sold ₱ 15,000 . Her deductions are: 3.63% for SSS based on her basic
monthly pay; ₱ 100.00 for PhilHealth; Pag-IBIG is 2% and 10% withholding
tax based on her gross earnings. Compute for her net pay.

Solution:

To compute for the Net Pay, you follow the formula:

Net Pay = Gross Earnings - Deductions

STEP 1: Compute for the total Gross Earnings.

Income
Basic Salary ₱ 12,500.00
Commission: ( ₱ 15,000 x 300.00
2%)
Gross Earnings ₱ 12,800.00

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 STEP 2: Compute for the total Deductions.

Deductions

SSS (₱ 12,500.00 X 3.63%) ₱ 453.75

Philhealth 100.00
Pag-Ibig (₱ 12,800.00 x 2%) 256.00
Withholding Tax (₱12,800.00 1,280.00
x 10%)
Total Deduction ₱ 2,089.75

Therefore,

Net Pay = ₱ 12,800.00−₱ 2,089.75

= ₱ 10,710.25

Practice Task 1

Complete each statement below with the correct word/s.

1. In the SSS contribution, the employer’s share is ___% while the
employee’s share is ___%.
2. In the _________________ contribution, both the employee and the
employer share 2% of the employee’s salary if the salary is more than
₱ 1,500.00 a month.
3. In the Pag-IBIG Fund contribution membership is made mandatory for
all employees under Republic Act _____.
4. All ____________ employees holding permanent and non-permanent
positions are members of GSIS
5. ______________ is intended for health purposes of the members and
their beneficiaries.
6.

Practice Task 2

1. Via is paid on a monthly salary basis amounting to ₱ 18,500.00 . Aside

from that, she is also given a rice subsidy allowance of ₱ 1000.00 and a
laundry allowance of ₱ 450.00per month. How much is her total taxable
income?

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 2. Compute for the net pay of an employee with the following data:

Basic Salary: ₱ 25,000.00

Overtime Pay: ₱ 2,800.00
Late/Undertime deduction: ₱ 800.00
SSS Contribution: ₱ 581.30
PhilHealth Contribution: ₱ 312.50
Pag-Ibig Contribution: ₱ 500.00

Practice Task 3

1. Given the data:

Basic Salary: ₱20,748.00

Overtime Pay: ₱ 1,800.00
Late/Undertime deduction: ₱ 250.00
SSS Contribution: ₱500.00
PhilHealth Contribution: ₱ 110.00
Pag-IBIG Contribution: ₱ 300.00

Compute for:
A. Gross Earnings
B. Total Deductions
C. Taxable Income

2. Edgar is an agent with a basic salary of ₱25,500.00 a month and a 5%

commission on his sales. For the month of June, he sold ₱18,000.00 of
goods. His deductions are: 3.63% for SSS based on his basic monthly
pay; ₱ 100.00 for PhilHealth; Pag-IBIG is 2% and 10% withholding tax
based on his gross earnings. Compute for the following:

A. Gross Earnings
B. Deductions
C. Net Pay

LET’S REMEMBER

The following are the standard payroll deductions:

⮚ Employee’s SSS contribution for private employees.

⮚ Employee’s GSIS contribution for government employees
⮚ PhilHealth contribution for all employees
⮚ Withholding taxes for all employees
⮚ Pag-IBIG fund Contribution

POST-TEST
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 Let’s check the amount of knowledge that you gained from studying the
lessons in this module. Choose the letter of the best answer. Write the
chosen letter on a separate sheet of paper.
1. Which of the following contributions an employee shares 2% of her
monthly basic salary?
A. Pag-IBIG Fund B. PhilHealth C. SSS D. GSIS

2. This monthly contribution is intended for health purposes of the

members and their beneficiaries.
A. Pag-IBIG Fund B. PhilHealth C. SSS D. GSIS

3. Compute for the taxable income of an employee with the following

data:
Basic Salary: ₱ 25,000.00
SSS Contribution: ₱ 581.30
PhilHealth Contribution: ₱ 312.50
Pag-IBIG Contribution: ₱ 500.00
A. ₱ 26,393.80 B. ₱ 25,812.50
C. ₱ 25,500.00 D. ₱ 25,000.00

4. Sylvia Santos has a basic monthly salary of ₱ 20,000.00 . She pays 10%
withholding tax on her salary, 3.63% for SSS, ₱ 250.00 forPhilHealth,
and 2% for Pag-IBIG. If she has a deduction of ₱ 500.00 for undertime,
how much is her net pay?
A. ₱ 16,624.00 B. ₱ 16,124.00
C. ₱ 17,124.00 D. ₱ 16,374.00

ASSIGNMENT

1. Avic Reyes has a basic annual salary of ₱ 345,000.00 . He pays 10%

withholding tax on her salary, 3.63% for SSS, ₱ 350.00 for PhilHealth,
and 2% for Pag-Ibig. How much is his monthly salary, and SSS and
Pag-IBIG contributions?

ANSWER KEYS

PRE-TEST
1. A 2. B 3. B 4. B

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 Practice Task 1
1. 7.37%, 3.63%
2. Pag-IBIG
3. 9679
4. Government
5. Philhealth

Practice Task 2
1. ₱ 18,650.00
2. ₱ 25,6060.20

Practice Task 3
1.
A. Gross Earnings- ₱ 22,548.00
B. Total Deductions- ₱ 1,160.00
C. Taxable Income- ₱21,388.00
2.
A Gross Earnings- ₱ 26,400.00
D. Total Deductions- ₱ 4,193.65
E. Taxable Income- ₱22,206.35

POST-TEST
1. B 2. A 3. D 4. B
ASSIGNMENT
Monthly Salary ₱ 345,000.00/ 12months = ₱28,750.00
SSS Contribution ₱28,750.00 x 3.63% = ₱1,043.625
Pag-IBIG Contribution ₱28,750.00 x 2% = ₱ 575.00

REFERENCES

● Lopez, B. R. C. Business Math Textbook for SHS, 2016. Vibal Group Inc.,
pp. 136 – 141.
● Lopez-Mariano, N. D. Business Mathematics 1st edition 2016, Rex
Bookstore, pp. 203 – 210.
● http://www.gsis.gov.ph, accessed May 26, 2020
● http://www.philhealth.gov.ph, accessed May 26, 2020
● http://www.sss.gov.ph, accessed May 26, 2020

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