Article 4(3) Income Tax on Payouts from Insurance Companies
- Maulana Ibrahim, Andre Wilson Siregar, Ellicia Emerliawati, & I Made Arya Wira Utama
- Aug 11
- 2 min read
Payouts from Insurance Companies are Exempted as Tax Objects
Payouts from insurance companies are considered additional assets by the insured party. However, insurance payouts mostly came from unexpected circumstances, such as accidents, fire, natural disasters, or health risks that can cause financial loss. Thus, the issuance of Article 4(3) Income Tax letter e of the Income Tax Law regulates that insurance payouts are non-taxable objects.
Tax Subject
Domestic Individual Taxpayers who receive payouts from insurance companies due to reasons such as accidents, sickness, or the death of the insured person, and a scholarship insurance payout
Non-Tax Object
The insurance payout in the form of replacement or compensation received by individuals in relation to health, accidents, life, dual-purpose, and scholarship insurance policies.
Individuals as Insurance Payout Receiver Obligations
The Individual Taxpayer, as the insurance payout recipient, will have the obligation to file all replacements or compensations from an insurance company as payouts in the Annual Tax Returns section of non-taxable income.
Case Study
Mr. Sapto has insured his daughter, Dina, in a health and accident insurance program since Dina was a little girl. In 2024, Dina is hospitalized in the Pondok Indah Hospital because Dina went through an accident and has received a payout from the insurance company, related to her inpatient treatment amounting to IDR50,000,000.
The payout received by Dina from the insurance company as compensation for her inpatient treatment in the hospital is considered an income exempt from being an income tax object.
Legal Basis
Law Number 7 Year 1983 regarding Income Tax as lastly amended by Law Number 6 Year 2023 regarding Stipulation of Government Regulation in Lieu of Law Number 2 Year 2022 on Job Creation to Become Law.
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