In Islamic law, there are two zakat that must be paid, namely zakat fitrah and zakat mal. Zakat fitrah must be paid for Muslims who can afford it and given during Ramadan until before the Eid al-Fitr prayer.
Zakat mal is zakat on assets that have reached a certain amount (nishab) in one year (haul). There are also those who fulfill zakat mal by calculating zakat income every month.
In the tax provisions, taxpayers who adhere to the religion of Islam or adherents of religions other than Islam are given the opportunity to deduct zakat or religious contributions which are mandatory for tax calculations.
Zakat paid for one year, can be deducted from gross income to get the value of taxable income for one year. This is regulated in Government Regulation Number 60 of 2010, and Minister of Finance Regulation number 254/PMK.03/2010.
Zakat in this case is zakat on income paid by individual taxpayers who embrace Islam or corporate taxpayers owned by adherents of Islam to amil zakat bodies or amil zakat institutions established or approved by the Government.
The institution was formed based on laws governing the management of zakat and its amendments. A list of amil zakat agencies or institutions can be seen in the attachment to Regulation of the Director General of Taxes number Per-15/PJ/2022 (download link at the end of the article).
As a basis for reducing income, zakat can be in the form of money or equivalent to money. For example, for zakat fitrah, it can be equated with the value of money according to the market price when it is paid. This also applies to religious donations that are mandatory for adherents of religions other than Islam.
Zakat paid by family members can be calculated as a deduction from the gross income of the head of the family. For married women who combine income with their husbands, the zakat paid can be deducted and reported in the husband’s annual notification letter (SPT). Likewise for zakat paid by children who are not yet adults, it can be calculated in their parents’ annual tax returns. Meanwhile, for married women who have lived separately from their husbands or separated their assets or chose to carry out their tax obligations separately, zakat can be reported in their annual tax returns.
Reporting Mechanism
Taxpayers who wish to deduct zakat from gross income must attach a photocopy of proof of zakat payment when reporting their annual tax returns. Proof of payment can be in the form of proof of direct deposit or transfer, at least containing:
1. Full name and NPWP of the payer
2. Amount of payment
3. Date of payment
4. Name of amil zakat agency or institution
5. Signature of the official of the amil zakat agency or institution, for payments made in person/cash
6. Validate the bank officer on proof of payment if via bank account transfer through a bank officer (teller).
This zakat deduction is reported in the Annual Tax Return in the tax year when the zakat is paid. For example, zakat paid during Ramadan 2023 can be submitted in the Annual Income Tax Return for the 2023 tax year. The Annual Income Tax Return (PPh) for the 2023 tax year must be submitted from January to March 31 2024 for personal income tax and April 30 2024 for corporate income tax.
This provision applies to taxpayers who wish to deduct zakat in the calculation of taxable income. If the taxpayer does not wish to deduct the zakat, then the zakat paid does not need to be reported in the annual tax return.