Indonesia

PPh 21 with TER: monthly withholding and the final true-up

How an Indonesian employer withholds PPh 21 on a resident permanent employee with TER, how the last-month recalculation works, a checked K/0 example with THR, and the Coretax filing rules.

Published Updated By Antonio

  • PPh 21
  • TER
  • Payroll
  • Coretax
On this page
  1. The short version
  2. Who counts as a “permanent employee” for PPh 21?
  3. Which TER category applies: A, B or C?
  4. How is PPh 21 calculated in the months before the last one?
  5. How is the last tax period recalculated?
  6. Worked example: a K/0 employee with THR in March
  7. How do you file and issue slips in Coretax?
  8. Special cases, kept separate from the base case
  9. Frequently asked questions
  10. Questions to ask your payroll system
  11. Sources

For an ordinary permanent employee who is an Indonesian tax resident, PPh 21 works in two steps. In every month except the last, the employer withholds the month’s gross income multiplied by a monthly effective rate (TER). In the last tax period (December, or the month the employee stops working), the employer recalculates the whole year with the Article 17 progressive rates and withholds only the difference from what it has already withheld. TER changes how the tax is spread across the year, not the annual tax itself. DJP’s own briefing on PMK 168/2023 says the TER method adds no new tax burden for employees.

This guide follows PP 58/2023, PMK 168/2023, PMK 81/2024 and the DJP Coretax reporting rule PER-11/PJ/2025, as checked on 15 October 2026. It explains the base case first. Joiners, leavers, expatriates, daily workers and the 2026 government-borne (DTP) incentive are kept in their own section.

The short version

Every month except the last Last tax period (December, or the month a permanent employee stops working)
Tax base Gross income of the month Annual net income minus PTKP, rounded down to the nearest Rp1,000
Rate Monthly TER (category A, B or C) Article 17 progressive rates, 5% to 35%
Deductions None Occupational cost, employee-paid pension/JHT/JP contributions, compulsory zakat paid through the employer
Coretax slip BPMP (monthly, a notification to the employee) BPA1 (annual slip for the year or part-year)
Result Monthly instalment Annual tax minus what was already withheld. A negative result is refunded to the employee

Sources: PMK 168/2023 Articles 8, 10 and 15; PER-11/PJ/2025 Articles 6–7.

Who counts as a “permanent employee” for PPh 21?

It is a tax label, not a labour-law label. PMK 168/2023 Article 1(10) defines a permanent employee (pegawai tetap) as someone who receives income regularly, including someone on a fixed-term contract who works full time in the job. A non-permanent employee (pegawai tidak tetap, Article 1(11)) is paid only when they work, by days worked, units produced or a job completed. How often someone is paid does not decide the question on its own. What matters is whether the income is genuinely regular, whether the person works full time in the job, and the actual working arrangement, so check the facts of each case rather than the contract label.

Which TER category applies: A, B or C?

The category follows the employee’s PTKP (non-taxable income) status, which is set by their situation at the start of the calendar year (PP 58/2023 Article 2(3); PMK 168/2023 Article 9(4)).

TER category PTKP status Annual PTKP Monthly gross taxed at 0% up to
A TK/0 Rp54,000,000 Rp5,400,000
A TK/1, K/0 Rp58,500,000 Rp5,400,000
B TK/2, K/1 Rp63,000,000 Rp6,200,000
B TK/3, K/2 Rp67,500,000 Rp6,200,000
C K/3 Rp72,000,000 Rp6,600,000

TK means unmarried and K means married. The number is the count of dependants. A married female employee receives PTKP for herself only (TK/0), unless she provides a written statement from the local government, at least sub-district (kecamatan) level, that her husband has no income (PMK 168/2023 Article 9(2)–(3)).

Each category is a table of income bands, and the rate rises with the band up to 34% at the top. These category A rows are the ones used in the example below:

Monthly gross income (category A) TER
Up to Rp5,400,000 0%
Rp12,500,001 – Rp13,750,000 5%
Rp13,750,001 – Rp15,100,000 6%
Rp15,100,001 – Rp16,950,000 7%
Rp28,000,001 – Rp30,050,000 12%
Rp30,050,001 – Rp32,400,000 13%

Use the full tables in the PP 58/2023 appendix when calculating.

TER is an average rate, not a marginal one. The PP 58/2023 elucidation explains that the monthly rates already take into account the occupational cost, pension contributions and PTKP that would otherwise be deducted. A 12% TER in a month does not mean that income was taxed at 12% over the year.

How is PPh 21 calculated in the months before the last one?

PPh 21 for the month = gross income for the month × TER.

Gross income is what the employee receives from the employer in the month, whether regular or irregular (PMK 168/2023 Article 5(3)). That means:

  • salary, all allowances and overtime;
  • THR, bonuses, production bonuses and similar irregular pay, in the month they are paid;
  • insurance contributions the employer pays on the employee’s behalf: BPJS Kesehatan, JKK (work accident), JKM (death), and health, accident, life, endowment and scholarship insurance premiums;
  • benefits in kind that are taxable.

Pension and old-age contributions the employer pays (such as the employer’s share of JHT and JP) are not counted as income (Article 7(c)). No deductions are taken in these months. The occupational cost, pension contributions and PTKP are applied only in the last tax period.

Foreign-currency pay is converted with the Minister of Finance exchange rate on the payment date or the date the income became payable, whichever comes first (Article 5(4)).

How is the last tax period recalculated?

In the last tax period, the employer:

  1. Adds up gross income for the year, or for the part of the year worked.
  2. Deducts the occupational cost (biaya jabatan): 5% of gross, capped at Rp6,000,000 a year, or Rp500,000 a month.
  3. Deducts pension-related contributions the employee pays through the employer (to an approved pension fund, BPJS Ketenagakerjaan or a similar old-age scheme), and compulsory zakat or religious donations paid through the employer to an official body.
  4. Deducts the annual PTKP for the employee’s status.
  5. Rounds the taxable income down to the nearest Rp1,000 and applies the Article 17 rates:
Annual taxable income Rate
Up to Rp60,000,000 5%
Over Rp60,000,000 to Rp250,000,000 15%
Over Rp250,000,000 to Rp500,000,000 25%
Over Rp500,000,000 to Rp5,000,000,000 30%
Over Rp5,000,000,000 35%
  1. Subtracts the PPh 21 already withheld in the earlier months. The remainder is the withholding for the last tax period.

If the remainder is negative, the employer must refund the excess to the employee and hand over the annual slip by the end of the month after the last tax period (PMK 168/2023 Article 21(1)). For a full-year employee that is 31 January. PER-11/PJ/2025 Article 7(2) sets the same one-month limit for giving the slip.

The annual tax is the same whichever way it was withheld. If TER over-withheld during the year, the employee gets the excess back. If it under-withheld, the last month collects the balance.

Worked example: a K/0 employee with THR in March

Take a permanent employee who is a tax resident of Indonesia for the whole year and works for the same employer from January to December, with no other income or benefits from the employer beyond those listed, and no DTP incentive. The employee is married with no dependants (K/0). That means category A and an annual PTKP of Rp58,500,000.

  • Monthly gross income: Rp15,000,000. It includes salary, fixed allowances and the employer-paid BPJS Kesehatan, JKK and JKM contributions.
  • THR: Rp15,000,000, paid with the March salary.
  • Employee-paid pension-related contributions: Rp300,000 a month (an assumption for illustration).

Months before the last one (TER category A)

Month Gross income TER PPh 21
January, February Rp15,000,000 each 6% Rp900,000 each
March (salary + THR) Rp30,000,000 12% Rp3,600,000
April to November (8 months) Rp15,000,000 each 6% Rp900,000 each
Total withheld, January–November Rp12,600,000

December (Article 17)

Step Amount
Annual gross income (12 × Rp15,000,000 + THR Rp15,000,000) Rp195,000,000
Occupational cost: 5% = Rp9,750,000, capped at (Rp6,000,000)
Employee pension-related contributions (12 × Rp300,000) (Rp3,600,000)
Annual net income Rp185,400,000
PTKP K/0 (Rp58,500,000)
Taxable income (already a multiple of Rp1,000) Rp126,900,000
5% × Rp60,000,000 Rp3,000,000
15% × Rp66,900,000 Rp10,035,000
Annual PPh 21 Rp13,035,000
Less: withheld January–November (Rp12,600,000)
PPh 21 to withhold in December Rp435,000

Reading the numbers. The 6% and 12% are monthly effective withholding rates applied to gross income. They are not the annual marginal bracket rates of Article 17. Over the year the employee pays Rp13,035,000, which is about 6.7% of Rp195,000,000 gross. The highest Article 17 bracket reached is 15%.

The March jump to 12% does not mean the THR was taxed at 12%. Without the THR, annual tax would be Rp10,785,000, so the THR adds Rp2,250,000 (15% of Rp15,000,000). March withholding rose by Rp2,700,000 (Rp3,600,000 less Rp900,000). The December true-up absorbs the difference.

If TER 6% were applied in December by mistake, Rp900,000 would be withheld instead of Rp435,000. The year’s withholding would be Rp13,500,000 against annual tax of Rp13,035,000, and the employee would be over-withheld by Rp465,000.

How do you file and issue slips in Coretax?

PPh 21 slips are made in the e-Bupot module of Coretax (PER-11/PJ/2025 Article 6). DJP’s guide describes both key-in and XML import.

  • BPMP (Bukti Pemotongan Bulanan Pegawai Tetap): one per permanent employee for each month except the last tax period. It serves as a notification to the employee. If several payments are made in one month, one slip is enough.
  • BPA1: the annual slip for private-sector permanent employees, issued in the last tax period (Article 7(1)(e) and (g)). The earlier BPMP withholding is prefilled and cannot be edited. If a BPMP is corrected, DJP says the BPA1 draft must be deleted and recreated. Government employees receive BPA2.
  • BP21 / BP26: for other payees. BP21 covers PPh 21 on payees other than permanent employees. BP26 covers PPh 26.
  • Slips are still made when nothing is withheld, for example when income is below PTKP, TER is 0%, or the tax is borne by the government. They are not made when no income was paid in the month (Article 8).
  • Payment and filing: pay by the 15th of the following month (PMK 81/2024 Article 94(2)) and file the SPT Masa PPh 21/26 within 20 days after the tax period ends, in practice the 20th (Article 171(1)). If either date falls on a Saturday, Sunday, national holiday, election day or national joint leave day, it moves to the next working day (Articles 100 and 173).
  • Nil returns: the SPT Masa PPh 21/26 is required for a month in which income was paid, even if no tax was withheld. For a month with no income paid it is not required, except in the last tax period, which must always be filed (Article 171(5)–(6)). That includes December and a month in which a permanent employee stops working.
  • Giving slips to employees: a BPA1 issued in Coretax is treated as delivered through the employee’s “Dokumen Saya” menu once the employee has activated their Coretax account (DJP A1 guide). The refund and annual slip deadline is the end of the month after the last tax period. The holiday rule in PMK 81/2024 covers payment and filing dates only, so treat that deadline as fixed.
  • Employee identity: NIK (or NPWP for foreign nationals) must be valid in Coretax. DJP warns that slips made with the placeholder NIK 9990000000999000 block the BPA1. They must be cancelled and reissued under the registered NIK.

The employee still reports the income in their own annual return, and the PPh 21 withheld counts as a tax credit (PMK 168/2023 Article 22).

Special cases, kept separate from the base case

Joined mid-year, already a resident since 1 January. Do not annualise. The annual tax is computed on actual income for the months worked, with occupational cost of Rp500,000 per month worked and the full annual PTKP (PMK 168/2023 Article 15(2) and the attachment example). TER can over-withhold in the first months. In the DJP example for an employee joining on 1 September, TER withheld Rp3,255,000 for September to November against annual tax of Rp280,000, so Rp2,975,000 is refunded. If the employee hands over a BPA1 from a previous employer, you may combine that income. This is optional.

Left mid-year. The month the employee stops working is the last tax period. Calculate the annual tax in that month, issue a BPA1 for that month, and refund any excess by the end of the following month. DJP’s guide shows an employee who leaves in July: BPMPs for January to June, and a BPA1 for July. A BPMP is not issued for the leaving month. A BPA1 can therefore cover only part of a year. If the person remains an Indonesian tax resident, the income is not annualised. Payments made after leaving, such as a later bonus, are paid to a former employee (mantan pegawai) and are withheld at Article 17 rates on the gross amount, with a BP21 (PMK 168/2023 Articles 3(1)(h), 12(8) and 16(6)). Severance and pension lump sums have separate rules that this guide does not cover.

Annualisation depends on tax residency, not the hire date. If an employee’s subjective tax obligation in Indonesia starts after January or ends before December, net income is annualised and the tax is prorated by months (PMK 168/2023 Article 15(3)). DJP’s examples are leaving Indonesia permanently, death, and a foreign national who becomes an Indonesian tax resident during the year. For someone who newly arrives and settles in Indonesia, PTKP is set at the start of the month they arrive, not 1 January (Article 9(5)). PPh 26 withheld earlier is no longer final once the person becomes a resident, and can be credited (Article 14(3)).

Non-resident individuals. Not TER. PPh 26 applies at 20% final, or the tax treaty rate if the treaty requirements are met (Article 14).

Non-permanent employees (daily, weekly, piece-rate). The daily TER applies to the whole daily gross, not only the excess. Up to Rp450,000 a day is 0%. Above Rp450,000 up to Rp2,500,000 a day it is 0.5% of the entire daily gross, so Rp500,000 in a day is taxed at 0.5% × Rp500,000 = Rp2,500, as in the PMK 168/2023 example. Above Rp2,500,000 a day, Article 17 rates apply to 50% of gross. If paid monthly, the monthly TER applies (Articles 12(2) and 16(2)).

Commissioners or supervisory board members paid irregularly. Monthly TER on the gross fee, with no year-end recalculation (Article 16(1)). Those who receive regular income count as permanent employees.

Non-employees (independent service providers). Article 17 rates apply to 50% of gross (Articles 12(3) and 16(3)).

PPh 21 DTP (borne by the government) for 2026, PMK 105/2025. This is a limited incentive, not a general exemption. It applies for the tax periods January to December 2026 only. The employer must be in the footwear, textile and apparel, furniture, leather or tourism industry, with a main business classification code listed in the regulation’s Appendix A. A permanent employee qualifies only with a registered NPWP or NIK, fixed and regular gross income of no more than Rp10,000,000 in January 2026 (or the first month of work for 2026 joiners), and no other DTP incentive. The PPh 21 must be paid to the employee in cash when the income is paid, a slip must be made, and use of the incentive must be reported in the monthly SPT, with any amendment filed by 31 January 2027. Otherwise the incentive is not given and the withheld tax must be paid in. Excess DTP is not refunded to the employee (Articles 3–6). At the time of checking, no amendment to PMK 105/2025 was found. Confirm eligibility before applying it.

Frequently asked questions

Does TER increase an employee’s annual tax? No. Annual PPh 21 is still calculated with the Article 17 rates after deductions and PTKP. TER only changes how much is withheld in each month before the last one. Any over-withholding comes back to the employee.

Why is December’s PPh 21 so different from other months? December is the true-up. If the TER instalments were below the annual tax, December’s withholding is higher. If they were above it, December’s withholding is lower, or zero with a refund.

Which TER category applies to a married employee with two children? K/2, which is category B, with an annual PTKP of Rp67,500,000. A married female employee is generally treated as TK/0 (category A) unless she has a sub-district letter confirming her husband has no income.

Do we have to file if no PPh 21 was withheld this month? If income was paid, yes: file a nil SPT Masa PPh 21/26, and make slips for employees below PTKP or at 0%. If no income at all was paid in the month, no filing is required, except in the last tax period.

An employee resigns in June. What changes? June becomes the last tax period. Calculate the annual tax in June, issue a BPA1 (not a BPMP) for June, refund any excess by the end of July, and file the June SPT Masa by 20 July, moved to the next working day if it falls on a holiday.

Questions to ask your payroll system

Whichever system you use, check that it can:

  • keep the TER category from the employee’s PTKP at the start of the year;
  • add THR and bonuses to the month they are paid;
  • recognise the last tax period, including the month a permanent employee leaves, and not only December;
  • produce BPMP, BPA1 and BP21 data in the format Coretax accepts;
  • flag invalid NIKs and DTP eligibility.

Sol IT payroll includes an e-Bupot PPh 21 function that calculates monthly PPh 21 withholding and prepares the e-Bupot file for upload to Coretax. How the special cases above and later rule changes are handled is confirmed per project, and your team should review the output before filing.

Tax treatment can vary with your company’s circumstances, each employee’s status and the rules applicable to the tax period. Contact Sol IT Tax Consulting for help applying PPh 21 and reviewing your company’s filings.

Sources

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