COMPUTING

THE NET PAY

NET PAY
• The amount of pay that the employee gets
after deductions are made
• It is also called the “take home pay”
• The most common deductions which are
mandated by law are;
• WITHHOLDING TAX
• SSS Contribution (private employees) / GSIS
Contribution (government employees
• Phil Health Contribution
• PAG – IBIG Contribution
WITHHOLDING TAX
• most basic and fundamental deduction
• Every employee is required to pay his/her
income tax annually
• Employers deduct certain amount from
employees’ salary every pay period
• “withholding tax is the installment payment
of the income tax for one year”
THE AMOUNT OF WITHHOLDING TAX TO BE
DEDUCTED DEPENDS ON THE FOLLOWING:

1. GROSS PAY – this refers to the total

amount of income per payment
period.
2. Payroll period. This refers to the
payment period – whether daily,
weekly, semi – monthly, or
monthly
EXAMPLE 1
1. Mark Umiten works as an
accounting clerk in a private
company. He receives a monthly
income of of Php 24,000. what is
his withholding tax for each pay
period?
SSS CONTRIBUTION
• All employees working in private
companies are automatically
enlisted members of the Social
Security System (SSS)
• SSS contribution provides benefits
to the employees, like salary loans,
sickness benefits, disability
benefits, and retirement benefits.
EXAMPLE 1
Luningning works as an office clerk
in a private company. She receives
a monthly income of Php 14,500.
What is her monthly SSS
contribution?

Answer: Thus, her SSS monthly

contribution is Php 526.80, while
her employer’s share is Php 1078.20
EXAMPLE 2
Linda Apolonio receives Php 21,900
monthly income as a private school
teacher. What is her monthly SSS
contribution?

Answer: Thus, her SSS monthly

contribution is Php 581.30, while her
employer’s share is Php 1208.70
EXAMPLE 3
Jenny Boncales works as a factory
worker. She receives a weekly
salary of Php 1,800. What is her SSS
contribution?

Answer: Thus, her SSS monthly

contribution is Php 254.30, while her
employer’s share is Php 525.70
GSIS CONTRIBUTION
• All government employees are
being deducted a certain amount
of Government Service
Insurance System (GSIS)
contributions, depending upon
the salary of the employees.
PHILHEALTH
CONTRIBUTION

• The Philhealth contribution

is a mandatory deduction
applied to all private and
government employees
• Members of Philhealth get
assistance during
hospitalization and sickness
EXAMPLE 1
Henry Dela Cruz receives a monthly
income of Php 18,700 as a guidance
consellor in a private school. What is
his monthly Philhealth contribution?

Answer: Employee’s Philhealth

contribution is Php 257.125. Likewise
his employer’s contribution is also Php
257.125.
EXAMPLE 2
Gina Diola works as a Division Chief
in a government office where she
receives a monthly income of Php
48,000. What is her Philhealth
monthly contribution?
Answer: Employee’s Philhealth
contribution is Php 550. Likewise his
employer’s contribution is also Php
550.
HDMF OR PAG – IBIG
CONTRIBUTION
• Another personal income deduction
that is mandated by law is the Home
Development Mutual Fund or Pag –
IBIG
• Pag – IBIG (Pagtutulungan sa
Kinabukasan: Ikaw, Bangko, Industria at
Gobyerno)
• providing an affordable financing option
enabling average-incomeFilipinos to buy
homes
EXAMPLE 1
Joel Reyes receives a monthly
income of Php 14,000 as a
government employee. How much is
his monthly HDMF contribution?

Answer: Thus, Joel Reyes’ HDMF

contribution is Php 280. Likewise,
his employer’s share is also Php
280.
EXAMPLE 2
Federico Ferrer receives a
monthly compensation of Php
4500 as a house gardener. How
much is his HDMF contribution?

Answer: Employee’s share is 90.

Likewise, employer’s share is 90.
COMPUTING THE NET PAY
Example 1
Federico Castro is a sales clerk in a
private company. He has a monthly salary of
Php 17,800. What is his net pay?
Withholding Tax : ₱ 0.00
SSS Contribution: ₱