- Maulana Ibrahim, Gabriel Muara Thobias, Ellicia Emerliawati, & Andre Siregar
Article 4(2) Income Tax on Deposit Interest

Due to the increase in people's income, the funds collected by banks through mobilization tools in the form of deposits, savings accounts, and Bank Indonesia Certificates have grown. Therefore, it is important that the imposition of taxes on interest and discounts needs to be secured and adjusted. However, the imposition on small deposits and savings still needs to be excluded in order to protect small savers who are generally still on low incomes.
Tax Subject
Article 4(2) Income Tax on Deposit Interest is imposed on individuals, entities, institutions, or organizations that receive income in the form of interest from deposits.
Tax Withholder
The tax withholder is a bank that pays deposit interest.
Tax Object
Article 4(2) Income Tax on Deposit Interest is imposed on income in the form of deposit interest.
Deposits are deposits in any name and in any form, either in the Rupiah currency or in foreign currencies, placed at or issued by banks as referred to in the provisions of the laws and regulations concerning banking.
Included in the definition of interest is interest received or earned from deposits placed overseas through a bank established or domiciled in Indonesia or a branch of a foreign bank in Indonesia.
Meanwhile, withholding income tax on deposit interest is imposed on:
Time deposit;
Certificate of Deposit; and
Deposit on call.
Exceptions to withholding are granted for:
Deposit interest as long as the principal amount of the deposit does not exceed Rp. 7,500,000,000.00 and is not a split amount;
Interest received or earned by domestic banks
Interest on deposits received or obtained by Pension Funds whose establishment has been approved by the Minister of Finance or has obtained permission from the Financial Services Authority as long as the funds are obtained from the following sources of income:
• employer contributions;
• participant fees;
• investment returns; and
• transfer from another Pension Fund.
Exemptions from withholding Income Tax Article 4(2) may be granted based on a Certificate of Exemption (“SKB”) of Income Tax Withholding on deposit interest issued by the KPP where the relevant Taxpayer is registered.
Tax Rate
The income in the form of the deposit interest is withheld at a rate of 20% of the total gross income for domestic taxpayers and BUT alongside a rate of 20% of gross income or the rate based on the Tax Treaty for foreign taxpayers.
Tax Base
The basis for imposition of Article 4(2) Income Tax on Deposit Interest is the gross amount of interest received or earned from the Deposit.
Due Date
Article 4(2) Income Tax on Deposit Interest is payable at the time the interest is received or earned.
Withholding Tax Procedure
Article 4(2) Income Tax on Deposit Interest is withheld by the bank on income in the form of interest received or obtained from deposits with final income tax deducted. Included as interest withheld by final income tax is interest received or earned from Deposits placed overseas through a bank established or domiciled in Indonesia or a branch of a foreign bank in Indonesia.
Tax Payment Procedure
The withholder of Article 4(2) Income Tax is required to pay the tax to the Post Office or a bank appointed by the Minister of Finance, no later than the 10th (tenth) of the following month after the month the tax withholding is made.
The payment is made using a Tax Payment Slip with the tax account code 411128 and the payment code 404.
If the tax payment due date coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the payment can be made on the next working day.
Tax Filing Procedure
The withholder of Article 4(2) Income Tax must report the income tax withheld in the monthly Article 4(2) Final Income Tax return by no later than 20th (twenty) days after the tax period ends.
The filing of income tax for income providers is carried out using a Final Income Tax Return Article 4(2). Recipients of income are required to report receipts in the Annual Income Tax Return.
If the filing due date of the monthly Article 4(2) Final Income Tax return coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the filing can be made on the next working day.
Example of Article 4(2) Income Tax on Deposit Interest
Illustration 1
Ani keeps her money at Bank Matahari in the form of a time deposit of Rp100,000,000 with an interest rate of 12% per year. On the deposit interest earned by Ani, how is the income tax calculated? and how much deposit interest does Ani receive net each month?
Deposit Interest Per Year = 12% x IDR100,000,000
Deposit Interest Per Year = IDR12,000,000
Deposit Interest Per Month = IDR12,000,000 : 12 months
Deposit Interest Per Month = IDR1,000,000
Income Tax Article 4(2) on Deposit Interest Per Month = 20% x IDR1,000,000
Income Tax Article 4(2) on Deposit Interest Per Month = IDR200,000
So, the net deposit interest received by Ani per month = IDR1,000,000 - IDR200,000 is IDR800,000.
Illustration 2
Anton has a time deposit in Bank XYZ of IDR7,000,000 with an interest rate of 6% per year. On the deposit, Anton received interest every month of IDR35,000. How much tax must be paid on Anton's deposit interest?
The interest of IDR35,000 per month is not deducted from Income Tax Article 4(2) because the deposit value is less than IDR7,500,000.
Dispute Potential
Potential of misapplication of the rules regarding higher rates of 100% for income recipients who do not have a Tax Identification Number which should be applied to Article 23 Income Tax but is applied to Article 4(2) Income Tax (Tax Court Decision Number Put-87944/PP/M.XVIB/25/2017)
Legal Basis
Law Number 7 Year 1983 regarding Income Tax as lastly amended by Law Number 11 Year 2020 regarding Job Creation
Government Regulation Number 131 Year 2000 regarding Income Tax on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate as lastly amended by Government Regulation Number 123 Year 2015 regarding Amendment of Government Regulation Number 131 Year 2000 regarding Income Tax on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate
Minister of Finance Regulation Number 212/PMK.03/2018 regarding Withholding of Income Tax on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate
Director General of Taxes Regulation Number PER-39/PJ/2010 regarding Amendment of Director General of Taxes Regulation Number PER-160/PJ/2005 regarding the Procedure of Issuance for Withholding of Income Tax Exemption on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate which has been Received or Obtained by Pension Funds whose Establishment has been Approved by the Minister of Finance or has Obtained Permission from the Financial Services Authority
Director General of Taxes Regulation Number PER-01/PJ/2013 regarding the Procedure of Issuance for Withholding of Income Tax Exemption on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate which has been Received or Obtained by Pension Funds whose Establishment has been Approved by the Minister of Finance or has Obtained Permission from the Financial Services Authority
Director General of Taxes Regulation Number PER-03/PJ/2020 regarding the Procedure of Issuance for Withholding of Income Tax Exemption on Interest from Savings and Time Deposits and Discount on Bank Indonesia Certificate which has been Received or Obtained by Pension Funds whose Establishment has been Approved by the Minister of Finance or has Obtained Permission from the Financial Services Authority
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