We refer to the letter “Why does IRAS make ‘provisional’ tax deductions?” (TODAY Online, May 28) by Huang Wenshan.

Personal income tax has to be paid a month from the date of the Notice of Assessment (tax bill). However, those who signed up for GIRO payment scheme are given up to 12 monthly interest-free instalments from May in the year to April of the following year to pay their taxes.

The GIRO payment scheme streamlines how taxes are collected; it is hassle-free for taxpayers, eliminates cheques and cash handling at the banks, and thus frees up resources and raises productivity overall.

Mr Huang mentioned in his letter that deduction of the same amount as his monthly instalment for the Year of Assessment (YA) 2012 was made in May this year.

The May deduction is the provisional monthly instalment for his personal income tax for YA 2013. This monthly deduction will continue until his assessment for YA 2013 is finalised. It is then revised after taking into account the actual tax and the amount he has paid thus far. If there is a net credit position for the taxpayer after his tax has been assessed, the credit will be automatically refunded to his bank account.

Mr Huang feels that these monthly deductions before he receives his tax bill are “advance payments” to IRAS for which interest should be paid.

We would like to point out that about 50 per cent of all the personal income tax assessments are done by June and 95 per cent by July each year. This means that most of the taxpayers on GIRO only pay one to two months of advance payments while they get to spread out their tax payment, over the next 10 to 11 months, till April of the following year.

During the filing season, a taxpayer who is on the No-Filing Service or who e-Files can see a message on his electronic tax return reminding him that a deduction of a provisional monthly instalment will start in May.

Details on the GIRO payment scheme are given in the GIRO application forms and on our website at www.iras.gov.sg. A taxpayer who wishes to adjust the monthly deduction amount or cancel his GIRO arrangement can simply make a telephone call to IRAS on 1800-356 8300.

We thank Mr Huang for the opportunity to explain the IRAS GIRO payment scheme.

Walter Lim
Director (Corporate Communications)
Inland Revenue Authority of Singapore