Article 4(3) Income Tax on Scholarships with Certain Requirements
- Maulana Ibrahim, Andre Wilson Siregar, Ellicia Emerliawati, & Nugraha Wira Taruna
- 1 day ago
- 3 min read
Certain Scholarship Excluded as Tax Objects
Scholarships are one of the facilities made available by certain institutions within the educational industry in order to increase the quality of human resources in Indonesia. By following certain requirements, income in the form of scholarships can be exempt from being included as an income tax object for its receiver. This decision is made to ensure taxation only aims to provide relief for the development of human resources.
Tax Subject
Domestic Individuals, both considered as a tax subject and/or non-tax subject, who received or obtained income in the form of scholarships, fulfilling certain requirements.
Non-Tax Object
Income in the form of educational support funding given to students, college students, employees or other parties as the scholarship provider, to fulfill and/or finish their education based on merit, academic potential, and/or economic limitations.
Criteria
Scholarships with certain requirements include:
scholarships given to a Domestic/Indonesian receiver, and
is given to fulfill formal and non-formal education conducted in both domestic and/or in foreign countries.
Formal education is the structured and tiered educational path that consists of basic education, secondary education, and tertiary education. Non-formal education, on the other hand, is an education path outside the formal education structure, which can be done structurally and using tiers.
Not included as scholarships with certain requirements exempt as an income tax object are:
Corporate Taxpayers that are scholarship providers with a business, ownership, or controlling relationship
Owner, Commissioners, Directors, or the Management of the Corporate Taxpayer that is a scholarship provider that has a familial relationship with a blood-relation in a straight line and/or one degree sideways, or
Individual Taxpayers who are scholarship providers with a business relationship.
with the scholarship recipient.
Certain Scholarship Receiver Obligation
Domestic Individuals who are Taxpayers as scholarship recipients, who fulfill certain requirements, will have the obligation to file their income in the form of a scholarship in the Annual Tax Returns in the Non-Taxable Income section.
Case Study
Ulin is a university scholarship recipient, given by Z Company’s scholarship program. On the scholarship received by Ulin, it is not considered as income since there are no business, ownership, or controlling relationship between Ulin as the scholarship recipient and Z Company as the scholarship provider.
Jefri, the oldest son of ABC Company’s commissioner, received a secondary school scholarship from ABC Company. Since Jefri has a blood-relation in a one degree straight line with the commissioner, which is his dad, then the scholarship is considered as income tax object for Jefri.
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
Government Regulations Number 55 Year 2022 regarding the Adjustment of Regulation in the Field of Income Tax
The Minister of Finance Regulations Number 246 Year 2008 regarding Scholarships Excluded from Income Tax Object as previously amended several times by the Minister of Finance Regulations Number 68 Year 2020 regarding the Imposition of Income Tax on Scholarships Fulfilling Certain Requirements and Net Surplus Received or Obtained By Non-Profit Agencies or Institutions Engaging in the Educational and/or Research and Development Industry
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