Taxable Amount For Income Tax Deduction

Posted Tue, May 6, 2025 1:48 AM

Good day from Recososa Law Firm!

We received your inquiry through Lawzana regarding the taxability of the House Requisition amount given to government employees. We appreciate the opportunity to assist you on this matter and would like to provide a substantial response based on relevant tax regulations and Philippine laws.

a.) Under the National Internal Revenue Code (NIRC) of the Philippines, particularly Section 32(A), gross income includes compensation for services in whatever form paid, including allowances, benefits, and other emoluments received by employees. Therefore, allowances or reimbursements provided in lieu of actual services or benefits—such as a House Requisition allowance—are typically considered taxable income unless explicitly exempted.

b.) Based on Revenue Regulations No. 3-1998 and further clarified in Revenue Memorandum Circulars (e.g., RMC No. 50-2018), only “benefits or allowances furnished for the convenience of the employer” and which are necessary for the performance of duty may be non-taxable. In your case, if you are already availing of free government accommodation (living in quarters) and are still being credited an amount for House Requisition, then such amount—if received in cash or accrued as a benefit—may be considered excess compensation or fringe benefit and therefore subject to income tax.

c.) If the Department provides the House Requisition allowance only to those who do not avail of accommodation, but the amount is still shown in the payroll or salary structure of those residing in government quarters, it may create a taxable discrepancy or an unjust enrichment if not properly withheld or reported. The Bureau of Internal Revenue (BIR) may consider such benefits as taxable unless there is a clear basis for exemption under the NIRC or internal guidelines approved by the DBM or COA.

d.) For compliance and to avoid future audit liabilities, the agency should align the treatment of this benefit with COA Circulars, DBM issuances, and relevant BIR rulings. If you are currently receiving this benefit while already occupying government housing, it is advisable to seek a ruling from the BIR or request internal clarification from your HR and Accounting Department to avoid the risk of tax deficiency findings.

We highly recommend that you hire our firm so we can assist you further in resolving this matter, including the preparation of a legal memorandum or correspondence to your Department or the BIR, depending on the specific remedy you prefer.

We can schedule an initial consultation via Zoom call. You may schedule a convenient date and time for the meeting through the following link:
👉 https://calendly.com/recososalawfirm

There is a ₱2,000 consultation fee, which will be refunded when you hire us after the consultation.

Alternatively, you may reach us by call or text at +63 917 504 6510 or email us at [email protected].

We look forward to assisting you in securing a proper legal remedy and full compliance.

Sincerely,
Recososa Law Firm
Litigation and Tax Advisory Services