Article 4(3) Income Tax on Social Security Program
- Maulana Ibrahim, Andre Wilson Siregar, Ellicia Emerliawati, & Nugraha Wira Taruna
- Oct 2
- 2 min read
Social Security Excluded as Tax Objects
In the modern economic landscape, human civilization creates many new financial mechanisms in order to solve economic problems, including the differences in social needs. The modernized version of the Social Security system continuously undergoes development even now.
Naturally, the social security system has a welfare redistribution role, which aligns with most of the tax collection’s objectives, functioning as the public’s welfare equality.
Table of Contents
Tax Subject
Certain Domestic Taxpayers who received or obtained income in the form of aid or help paid by the Social Security Program Agency (Badan Penyelenggara Jaminan Sosial/BPJS).
Those included as certain Taxpayers:
Taxpayers or citizens who are considered part of the disadvantaged group living below the poverty line, following the criteria and data set by the ministry in charge of social welfare within the government.
Taxpayers or citizens undergoing natural disasters or disasters caused by one or several events stemming from natural conditions, including earthquakes, tsunamis, volcanic eruptions, flooding, droughts, twisters, and landslides, and/or
Taxpayers or citizens undergoing disasters such as immeasurable accidents, which are threatening the livelihood or safety of said person.
Non-Tax Object
Aid or help paid by the Social Security Program Agency for certain Taxpayers, in the form of special aid given to Taxpayers or citizens part of the disadvantaged group, or are undergoing natural disasters or accidents.
Social Security Benefits
Benefits received by the Social Security Program participants include:
Health Insurance Program
Accident Insurance Program, and/pr
Death Insurance Program
Social Security Receiver Obligation
Domestic Individuals who are considered Taxpayers who received aid from the Social Security Program Agency, fulfilling certain criteria, are obligated to file their income on their Annual Income Tax Returns in the Non-Taxable Object section.
Case Study
Mr. Husni is a Health Social Security Program participant needing a surgical procedure to cure his illness. Mr. Husni submitted a Social Security Program claim for the surgical procedure. Thus, the claim received by Mr. Husni is not a tax object.
Husen is a factory worker in a manufacturing company. Husen went and had an accident one day during work hours, which then Husen used to claim his Social Security Program insurance. The income, as a result of the insurance claim, is not considered a taxable 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
The Government Regulations Number 73 Year 2016 regarding Income Tax On Social Security Programs Run By The Social Security Program Agency
The Minister of Finance Regulations Number 247/PMK.03/2008 regarding Help Or Aid Paid By The Social Security Program Agency To Certain Taxpayers Exempt From Being An Income Tax Object
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