Seyed Mohammad Hadi Sobhanian, the head of the National Tax Administration, issued a new circular to the General Tax Administration on December 20, 2023, which addresses ambiguities regarding items subject to income tax on salaries. This amendment includes two types of payments that are exempt from taxes according to agreements with the National Budget and Planning Organization, as well as decisions made by the Cabinet and the Supreme Labor Council.
New Tax Exemptions
According to this amendment, payments such as housing allowances, family allowances, child allowances, and household consumables assistance (food vouchers) will be subject to tax exemptions. These changes are made in accordance with the country's tax laws and regulations, particularly Article 83 of the Direct Taxation Law, and aim to facilitate and improve the financial situation of employees.
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Conventional Limits and Tax Calculations
In this amendment, "conventional limits" for other payments will also be calculated based on documents and within the framework of laws, regulations, and rulings of the Administrative Justice Court. This can, in turn, lead to greater transparency in the tax calculation process and also improve the financial conditions of employees.
The text of Article 83 of the Direct Taxation Law clearly states that taxable income from salaries includes wages and benefits related to the job, whether continuous or non-continuous, before deductions and after subtracting the exemptions provided in this law. Thus, the recent amendments allow employees to benefit from more advantages while also helping to facilitate the tax process.
Social and Economic Consequences
This action can have positive effects on the living conditions of employees and, especially in the current economic situation, can lead to an improvement in the financial conditions of households. Additionally, by reducing the tax burden, employees can focus more peacefully on their job responsibilities and improve their quality of life.
Ultimately, this amendment reflects the government's attention to the welfare of employees and its efforts to improve their economic conditions. In a situation where many families are struggling with financial challenges, these changes can be a significant step toward supporting this important segment of society.
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