Scribd
Upload
297 views1 page

Module 13 Optional Standard Deduction

The document discusses the optional standard deduction (OSD) for individuals and corporations in the Philippines. For individuals, the OSD is 40% of gross receipts or sales. For corporations, it is 40% of gross income subject to regular tax. Individuals cannot claim any other deductions while corporations can deduct cost of sales or services. The OSD also applies to general professional partnerships at 40% of gross income, with partners unable to claim expenses against shared net income. Examples are given comparing taxable income calculations with itemized versus OSD deductions.

Uploaded by

Marklein Dumangeng
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
297 views1 page

Module 13 Optional Standard Deduction

The document discusses the optional standard deduction (OSD) for individuals and corporations in the Philippines. For individuals, the OSD is 40% of gross receipts or sales. For corporations, it is 40% of gross income subject to regular tax. Individuals cannot claim any other deductions while corporations can deduct cost of sales or services. The OSD also applies to general professional partnerships at 40% of gross income, with partners unable to claim expenses against shared net income. Examples are given comparing taxable income calculations with itemized versus OSD deductions.

Uploaded by

Marklein Dumangeng
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Module 13 B

RIT: OPTIONAL STANDARD DEDUCTION

PERCENTAGES OF OSD
1. For individuals = 40% of gross receipts or gross sales BIR FORM 1701A
2. For corporations = 40% of gross income subject to regular tax BIR FORM 1702-RT

Individual taxpayers cannot claim any class of deduction whereas corporation can only deduct cost of
sales or cost of services.

Mandatory itemized deduction:


1. Taxpayers that are exempt with no taxable income
2. Taxpayers that are subject to special/preferential tax rates
3. Taxpayers subject to mixed tax rates

OSD and GPP


 GPP net income shall be determined in the same manner as a corporation
 GPP OSD is 40% of gross income
 Partners can no longer claim expense against their share from GPP net income

Gross Sales 9,350,000


SRAD 350,000
COS 3,000,000
BUS. EX 4,000,000

For itemized deductions:


Gross Sales 9,350,000
Less: SRAD 350,000
COS 3,000,000
BUS. EX 4,000,000
Taxable Income 2,000,000

For Optional standard deduction:


ITP Corp
Gross Sales 9,350,000 9,350,000 9,350,000
SRAD 350,000 (350 ,000) (350,000)
COS 3,000,000 (3,000,000)
BUS. EX 4,000,000
Net Sales 9,000,000 6,000,000
OSD rate 40% 40%
AD/OSD Deductions 3,600,000 2,400,000
Taxable Income 5,400,000 3,600,000

You might also like