Understanding Fixed Deposit Interest Taxes in Indonesia, You Must Know!

Deposit Interest Tax – One of the most favored financial products in Indonesia is the deposit. Apart from offering higher interest rates than regular savings, deposits are popular due to their security. Deposits are one of the financial products guaranteed by the government through the Indonesia Deposit Insurance Corporation (IDIC).

However, did you know that deposits are also subject to taxation? This tax is a deduction from the interest earned, so the total amount you receive will be subject to taxation. Let's explore the complete explanation regarding deposit interest tax.

Also Read: What's that Financial Problems? Read in full!

Understanding Fixed Deposit Interest Taxes in Indonesia

1. What is Deposit Tax?

While the security of deposits is a primary attraction, unfortunately, not everyone is aware that the profits earned from interest are subject to taxation. Tax regulations are set by the Directorate General of Taxes through several applicable regulations. 

The two main regulations related to deposit interest tax are PP 131 of 2000 (effective from 1 January 2001) concerning Income Tax on deposit and savings interest, and the discount of SBI KMK-51/KMK.04/2001 (effective from 1 January 2001) concerning the deduction of Income Tax on deposit and savings interest, and the discount of SBI. It's also important to note SE-01/PJ.43/2001 (effective from 1 January 2001) regarding PP 131 of 2000.

The tax rate is 20% and applies to deposits with a nominal value equal to or exceeding IDR 7,500,000. Deposit interest tax is a final income tax, so it cannot be credited from the total tax due.

This tax is also imposed on interest obtained from deposits and savings placed through banks domiciled in Indonesia or the branches of foreign banks in Indonesia.

2. How to Calculate Deposit Interest Tax

deposit interest tax

After understanding what deposit interest tax is, you also need to know how to calculate it. As an example, suppose you have a deposit of Rp100.000.000 in a bank with a deposit interest rate of 6% for one year. Here is the calculation of the tax you have to pay:

Annual Deposit Interest Value:

Rp100.000.000 x 6% = Rp6.000.000

Monthly Deposit Interest Value:

Rp6.000.000 : 12 = Rp500.000

Monthly Deposit Tax:

20% x Rp500.000 = Rp100.000

Yearly Deposit Tax:

Rp100.000 x 12 = Rp1.200.000

With an interest rate of 6%, you will pay a tax of Rp1.200.000 per year. Understanding how to calculate deposit tax provides a clearer picture of how much tax deduction needs to be considered in planning your finances.

So, now you can start calculating and estimating the potential profits you can obtain every month or year from the deposit interest rate you have.

Also Read: What Is Financial Risk? Let's Prevent it

After reading this article, hopefully, you have a deeper understanding of deposit interest tax and how to calculate it. Remember that knowledge about deposit tax can be the key to your success in managing financial investments. 

If you want a deposit that guarantees profits and is safe, try the Smart Saver deposit at Whiz. You can get an interest rate of 6.75%, and it's safe because Whiz collaborates with partner banks registered as participants in the IDIC