Do I have to pay EPF and income tax on the CNY bonus?
The end of the year is approaching, and I expect many people to receive bonuses one after the other. So, do I have to pay the bonus into the provident fund? Is the bonus subject to taxation?
According to the Employees Provident Fund Act, the provident fund must be paid as long as it is remuneration for work performed under the employment contract. Because the bonus will be included in the employee’s income, the provident fund must be paid.
However, because Ganjaran or angpao are not considered compensation for contract work, there is no need to pay EPF.
Furthermore, under the Income Tax Act, bonuses are taxed, so you must pay personal income tax on the bonuses you receive. If you deduct PCB from your paycheck each month, the bonus you receive will be the tax-deducted amount.
To put it simply, bonuses must pay both the provident fund and personal income tax, whereas rewards or red envelopes do not. Remember to include the bonus you received on your tax return next year.
