Annual Tax Return Overpayment or Underpayment When Filing Taxes, Here's the Difference

Kapanlagi.com - Every beginning of the year, taxpayers in Indonesia are faced with an important task: reporting the Annual Tax Notification (SPT). However, it is not uncommon for many to still feel confused about the terms "overpayment" and "underpayment" that arise after the report is submitted. Understanding these two statuses is crucial to avoid fines and manage finances better.

This tax status is not just a number on paper. It is the result of a calculation between the Income Tax (PPh) owed and the tax credits that have already been paid by the taxpayer, either through withholding by third parties or self-payment. From this calculation, three possible statuses will emerge: overpayment, underpayment, or zero.

To understand this matter more deeply, check out the complete explanation summarized by KapanLagi.com on Monday (24/3). With the right knowledge, you can avoid problems and manage your finances more wisely!

1. Understanding Underpayment and Overpayment in Annual Tax Returns

Quoted from KapanLagi.com from the site pertapsi.or.id, in reporting the Annual Tax Return, taxpayers will receive a final status indicating whether their tax is overpaid, underpaid, or zero, based on the difference between the total income tax due and all tax credits they possess.

An overpayment status means the total tax paid during the tax year is greater than the obligation that should be, thus the taxpayer is entitled to a tax refund or restitution. Meanwhile, underpayment indicates that the tax owed is greater than the amount already paid, so the taxpayer must settle the deficiency before the final reporting deadline.

"An overpayment status means there is an excess tax payment that can be requested or refunded by the taxpayer concerned through the Tax Service Office (KKP) where they are registered. An underpayment status means there is a tax deficiency that should be owed and must be paid by the taxpayer concerned. As for a zero status, it means there is neither an excess nor a deficiency in tax payments," the site writes.

2. Complete Explanation of Overpayment Tax Status (Article 28A of the Income Tax Law)

In the world of taxation, the status of overpayment tax becomes an interesting highlight, where the amount of tax credits exceeds the tax obligations that must be paid within a year, and this can be converted into a refund through the restitution process. Based on Article 28A of the Income Tax Law and Article 17B of the General Provisions and Tax Procedures Law, before the refund is made, the Directorate General of Taxes will examine the validity of documents such as evidence of deductions, payments, and attached financial reports.

Taxpayers who meet certain criteria—such as submitting their annual tax return (SPT) on time, being free from arrears, and having audited financial statements with an unqualified opinion for three consecutive years—have the opportunity to receive an advance refund in accordance with PMK No. 39/PMK.03/2018.

The criteria for certain taxpayers referred to are as follows:

• Timely submission of the annual tax return (SPT).
• No tax arrears for all types of taxes, except for tax arrears that have obtained permission to pay in installments or defer payment of taxes.
• Financial statements audited by a public accountant or government financial supervisory agency with an unqualified opinion for 3 (three) consecutive years.
• Has never been convicted of tax-related crimes based on a court ruling that has permanent legal force within the last 5 (five) years.

3. Complete Explanation of Underpayment Tax Status (Article 29 of the Income Tax Law)

The underpayment tax status indicates that your tax obligation is higher than the amount that has been credited over the year, making it important to settle it immediately before filing your Annual Tax Return. According to Article 29 of the Income Tax Law, this settlement must be made before the tax reporting deadline, which is March 31 for individual taxpayers and April 30 for corporate taxpayers following the calendar year. However, for those with a different fiscal year, such as from July 1 to June 30, the deadline for settling underpayment obligations is no later than October 31 of the relevant year.

4. Procedures and Deadlines for Overpayment Refunds

Taxpayers who believe they have overpaid taxes can easily apply for a refund at the tax office. After going through the examination process, if your application is approved, a Preliminary Tax Overpayment Refund Decision Letter (SKPPKP) will be issued. According to PMK 39/2018, for taxpayers who meet certain criteria, expedited refunds can be granted within a maximum of one month after a complete application is received, without the need for a thorough examination. However, there are nominal limits for applying for preliminary refunds, namely a maximum of Rp100 million for individual income tax, Rp1 billion for corporate income tax, and Rp1 billion for VAT submitted by taxable entrepreneurs.

5. Questions and Answers About Underpayment and Overpayment of Tax Returns (People Also Ask - Google)

1. What is the status of underpayment of tax returns?

Underpayment status means that the tax owed is greater than the tax that has been paid and must be settled.

2. What is the status of overpayment of tax returns?

Overpayment status occurs when the amount of tax paid is greater than the tax obligation, allowing the taxpayer to apply for a refund.

3. How to apply for a tax refund for overpayment?

The taxpayer can submit a refund request to the Tax Office by attaching documents in accordance with the provisions of PMK 39/2018.

4. What is the deadline for paying tax deficiencies?

For individual taxpayers, it is March 31, for corporations, it is April 30, or depending on the end of the fiscal year.

5. What can be done if one does not want a refund?

The taxpayer can offset the overpayment to reduce the tax for the following year.

(kpl/mni)