Dictionary description:

Personal Income Tax refers to the personal income tax that is automatically deducted from an employee's salary. The amount is predetermined by tax authorities based on the individual's tax conditions.

Explanation:

This tax is part of the payroll process where employers withhold a portion of an employee’s earnings and pay it directly to the tax authorities on the employee's behalf.

Examples of use in an accounting:

• Recording monthly income tax deductions for each employee.
• Adjusting payroll entries to account for tax changes.
• Reconciling withheld tax amounts with tax authority statements.

FAQ:

• Q: How is Personal Income Tax calculated?
• A: It is calculated based on tax rates set by the government, considering the individual's income and personal allowances.
• Q: What happens if Personal Income Tax is not paid correctly?
• A: Errors can result in penalties or adjustments during annual tax reconciliations.
• Q: Can employees adjust their Personal Income Tax?
• A: Yes, employees can apply for adjustments if their circumstances change, affecting their tax bracket.