Understanding Tax Rules on JHT Withdrawals

The Jaminan Hari Tua (JHT) benefit is an entitlement that participants can claim under certain conditions, such as entering retirement, experiencing termination of employment, or meeting the claim requirements stipulated by prevailing regulations. However, many workers still do not understand that the disbursement of JHT benefits is also subject to tax provisions.

The imposition of tax on JHT benefits is not a new rule. This policy has been regulated by the government through Government Regulation (PP) Number 68 of 2009, which sets the Income Tax (PPh) rates on lump-sum payments for severance pay, pension benefits, old-age allowances, and old-age security.

Under this regulation, JHT benefits received by participants may be subject to final Income Tax Article 21 (PPh Pasal 21) withholding. Thus, the tax deduction is part of the implementation of nationally applicable tax provisions.

Participants with a JHT balance of up to Rp50 million are not subject to tax. Meanwhile, for participants who withdraw a JHT balance exceeding Rp50 million, a final Income Tax of 5 percent is imposed. This provision applies to participants who have never made a partial withdrawal of their JHT balance while still employed.

For participants who have previously made a partial withdrawal of their JHT balance, a progressive Income Tax will be applied upon subsequent withdrawals. The applicable rates are 5 percent for a final balance of up to Rp60 million, 15 percent for balances above Rp60 million up to Rp250 million, 25 percent for balances above Rp250 million up to Rp500 million, 30 percent for balances above Rp500 million up to Rp5 billion, and 35 percent for balances exceeding Rp5 billion.

Consequently, a partial JHT withdrawal may lead to greater tax consequences upon the next benefit disbursement. Therefore, workers need to carefully consider their objectives and needs before deciding to make such a withdrawal.

In line with its philosophy, the JHT programme is designed as a long-term financial protection instrument, ideally utilised when a worker enters retirement or is no longer productively employed, so that the benefits received can be more optimal and provide better economic protection for the worker and their family.