Analysis of the Differences in Calculation Criteria for "Annual Income" and "Taxable Income" in Individual Income Tax

Since the issuance of Measures for Individual Income Tax Self-Filing (Trial) (hereinafter referred to as Measures) by the State Administration in 2006, because both similarities and certain differences exist between the calculation gauge of "annual income" of self-filing taxpayers whose annual income is over RMB120,000 Yuan (hereinafter referred to as "filing of 120,000") and that of taxable income for normal tax filing, taxpayers can easily confuse the two calculation gauges. With the approach of the filing of 120,000 in 2008, how to distinguish the difference between the two calculation gauges has again become a focus of attention for taxpayers. The basic difference between the two calculation gauges under normal circumstances will be briefly analyzed below.

I. Basic Difference Between Calculation Gauges of Annual Income and Taxable Income of Individual Income Tax

Since the relevant policy provisions on the calculation gauges of annual income and taxable income of individual income tax are very complicated, considering that most taxpayers for the filing of 120,000 are high-income earners, so, based on the premise that (annual, monthly or per-time) taxable income is greater than 0, we will briefly analyze the basic difference between the two calculation gauges according to taxable income items: