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Direct personal income tax (NDFL) is paid on employee salaries. Employers become tax agents and withhold income taxes from wages, directing the money to the federal budget. We will tell you about the rules for calculating and transferring tax, benefits and tax deductions.
What is personal income tax
Personal income tax stands for personal income tax.
Income tax (outdated name personal income tax) is one of the types of direct taxes that are levied on the income of a private individual. It is calculated as a percentage of taxable income. In simple words, personal income tax is a personal income tax that is forcibly collected and sent to the budget to finance government spending. There is no separate law on personal income tax; it is regulated, as mentioned above, by Chapter. 23 Tax Code of the Russian Federation. It describes in detail what the object and subject of taxation is, how individual income tax is calculated and paid, in which cases taxes on the income of individuals are not levied, and other aspects related to the taxation of income of individuals are discussed. We will talk about the most important of them below.
How to register
Choose how it is more convenient for you to register: through a mobile application or your personal account on the tax website. The My Tax application is available on Google Play and AppStore.
How to register through the application:
— Indicate your phone number. You will receive an SMS with a confirmation code.
— Select the region in which you work.
— Enter the password for the taxpayer’s personal account. If you don't have one, take a photo of the page of your passport with your photo.
— Take a selfie. The application will compare the photo with the page in the passport.
— Confirm your registration. Enter the PIN code that you will use to log into the application.
Self-employed people are not registered with the tax authorities. It is useless to come to the inspection: you will waste time and only receive links to the application and personal account.
On what income is tax paid?
In the simplest, but at the same time the most widespread version, personal income tax is withheld from wages by the employer’s accounting department. But income tax is taken not only from wages; taxes are also paid on bonuses and other payments to employees. In general, the Tax Code of the Russian Federation defines objects of taxation as income received by personal income tax taxpayers (Article 209):
- from sources in the Russian Federation and/or from sources outside the Russian Federation - for tax residents of the Russian Federation (clause 1);
- from sources in the Russian Federation – for tax non-residents of the Russian Federation (clause 2).
Thus, payers of personal income tax are both residents and non-residents of the Russian Federation. According to Part 2 of Art. 207 of the Tax Code of the Russian Federation, tax residents are individuals who are actually in the Russian Federation for at least 183 calendar days over the next 12 consecutive months. The period of stay in the Russian Federation is not interrupted by the period of stay abroad for short-term (less than 6 months) treatment or training, as well as for work in offshore hydrocarbon fields. Regardless of the actual time spent in the Russian Federation, Russian military personnel serving abroad and government employees seconded to work abroad are recognized as tax residents of the Russian Federation (Part 3 of Article 207 of the Tax Code of the Russian Federation).
Other types of taxable income, except payments from employers to employees:
- from the sale of property;
- from renting out property, for example, an apartment or a car;
- from transactions with securities;
- received in the form of dividends;
- received in the form of winnings from gambling and lotteries.
The list is not exhaustive. By default, personal income tax is paid on all types of income except those for which such payment is not provided. It should also be borne in mind that personal income tax in the same situation may or may not be collected, depending on the specific situation, for example, on the status of the taxpayer. So, if an apartment is given to a close relative, then the recipient does not have to pay tax (clause 18.1 of Article 217 of the Tax Code of the Russian Federation), and if not to a close relative, then personal income tax will have to be paid.
What is not subject to personal income tax
Not all incomes of citizens are subject to taxes. The list of income not subject to personal income tax is given in Art. 217 of the Tax Code of the Russian Federation, and it is very extensive, containing several dozen positions. Such income, in particular, includes:
- state benefits (except for temporary disability benefits);
- pensions;
- monthly payments in connection with the birth (adoption) of the first and second child according to Federal Law No. 418-FZ of December 28, 2017;
- income of volunteers received under civil contracts for work and services under Federal Law No. 135-FZ of August 11, 1995;
- alimony;
- some categories of one-time payments, including financial assistance;
- rewards to donors for donating blood and breast milk.
In addition, income received in specific situations is not subject to taxation. Thus, in the previous section an example was given of donating an apartment to a close relative. An example of another situation when you do not need to pay personal income tax is the sale of an apartment that was owned for at least the minimum maximum period of ownership (Article 217.1 of the Tax Code of the Russian Federation) - 5 years (Part 4), during privatization, inheritance from a close relative, upon receipt ownership under a rental agreement – 3 years (Part 3).
Who are self-employed
Self-employed are people who work for themselves. They provide services, perform work, and sell goods of their own production. They run a small business, earn extra money alongside their main job, or take their first trial orders. Almost everyone found themselves in the role of self-employed: they worked part-time as freelancers, gave rides to people, and helped friends for money.
Typically, self-employed people work without registration. Opening an individual entrepreneur for a part-time job is too troublesome. There is also no need to attract the attention of the tax authorities. As a result, millions of people do not pay taxes, and the budget loses tens of billions.
Lawmakers are thinking about how to bring the economy out of the shadows. They proposed a new way to work officially - easier than registering an individual entrepreneur. A person registers using a mobile application at any time. It is exempt from insurance premiums and pays only if there are revenues - 4-6% of each.
On January 1, 2021, the tax regime was launched in 4 pilot regions - Moscow, Moscow region, Kaluga region and Tatarstan. By the end of October 2021, 260,000 people had already registered. From October 19, 2021, you can become self-employed in all regions of Russia.
Formally, the regime is called “Professional Income Tax”. Immediately an abbreviation appeared - NPD. When you see this abbreviation, know that we are talking about the self-employed. Only self-employed is a “folk” term that is not in the text of the law.
The law is valid until December 31, 2028. It guarantees that conditions for the self-employed will not worsen for 10 years. The tax rate will remain the same, and insurance premiums will not be forced to pay. Therefore, self-employment is not a trap. After registration, a person will not be subject to tax burden.
