Fundamentals of Accountancy,

Business and Management 2

Quarter 2 – Module 8.2:

Income and Business Taxation
 Lesson 2: Explain the procedure in the
computation of gross taxable income and tax
due.

After going through this module, you are expected

to:
1. explain the procedure in computing gross
taxable income and tax due for Income and
Business Taxation.
https://www.bir.gov.ph/index.php/bir-forms.html to check the
different forms used in filing Income Tax Return(ITR)
Activity 1: Compute for the Gross Business
Income of Mr Lee Butero Trading.
 Before we proceed on how to compute the gross taxable
income and tax due, let's define first tax schedule and tax
due.

TAX SCHEDULE is gross income minus the

deductions allowed by law.
Taxable income is the amount on which the tax
computed.
Tax Due - the amount of tax to be paid to the
government by a taxpayer
THE PROCEDURE IN COMPUTING THE GROSS
TAXABLE INCOME AND TAX DUE
Illustration 1:
An employee receives the following:
13th month pay P 24,000
Christmas bonus (Non-performance based) 6,000
Rice subsidy 21,600
Uniform allowance 7,000
Laundry allowance 2,400
Productivity bonus (received under CBA and
productivity incentive schemes) 5,000
Requirement: Compute for the taxable portion of the amounts
received.
Additional Information:

➢ The P210 reimbursement for transportation costs in relation

to overtime work is omitted because this is not taxable.

➢ The P8,000 paid vacation leaves taken during the year are
taxable. Because this amount already included in the salary, no
adjustment is necessary. Note that only monetized unused
vacation leaves considered de minimis benefits; those used are
not
Additional information:
The ending inventory per physical count is P60,000.
Requirements:
a Compute for the tax due assuming the taxpayer uses the
itemized deductions
b. Compute for the tax due assuming the taxpayer avails
the
optional standard deduction (OSD).
Percentage Tax Due is 0 (zero). Alejo is not liable
for any percentage tax on his business income since
he chose the 8% income tax rate. It was discussed in
the previous module under Gross Business Income
Optional Eight percent (8%) Tax.
Compute what is asked
Additional information:
➢ The ending inventory per physical count is P60,000.
1. How much is the tax due assuming the taxpayer elects to deduct
itemized deductions?
A. 27,500 B. 30,000
C. 57,500 D.0
2. How much is the tax due assuming the taxpayer avails the
optional standard deduction (OSD)?
A. 37,600 B. 67,600
C. 77,000 D. 83,000
Let us check what you have learned.
Let us check what you have learned.