Q：
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Can the monthly wage expenses incurred by individual industrial and commercial households be deducted from production and business income?
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A：
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According to Article Twenty-One of the Measures for the Calculation of Personal Income Tax of Individual Industrial and Commercial Households (Order No. 35 of the State Taxation Administration), reasonable salary expenses actually paid to employees are allowed to be deducted. The wages and salaries of individual business owners shall not be deducted before tax.
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Q：
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Can the expenses incurred by newly established individual industrial and commercial households for purchasing small cars for daily household travel be deducted from their production and business income?
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A：
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Expenses incurred by individual industrial and commercial households for personal and household purposes shall not be deducted before tax.
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Q：
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Running a supermarket as an individual industrial and commercial household, a portion of the purchased goods will also be used for household consumption, which cannot be divided separately. How should we claim deduction before production and business income tax?
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A：
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In the production and operation activities of individual industrial and commercial households, production and operation expenses and personal and household expenses should be separately accounted for. For expenses that are difficult to distinguish between production and business operations and personal and household expenses, 40% of them are considered as expenses related to production and business operations and are allowed to be deducted.
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Q：
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Can individual businesses, after recruiting employees, deduct the pension insurance, medical insurance, supplementary pension insurance, and supplementary medical insurance purchased for employees and owners themselves from their production and operation income? Is there a deduction limit regulation?
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A：
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Individual industrial and commercial households are allowed to deduct the standard pension insurance premiums, standard medical insurance premiums, unemployment insurance premiums, maternity insurance premiums, work-related injury insurance premiums, and housing provident fund paid for their owners and employees in accordance with the scope and standards stipulated by the relevant competent departments of the State Council or provincial people's governments.
The supplementary pension insurance premiums and supplementary medical insurance premiums paid by individual industrial and commercial households for employees shall be deducted based on the actual amount within the standard of no more than 5% of the total salary of the employees; The excess amount shall not be deducted.
The supplementary pension insurance premium and supplementary medical insurance premium paid for the individual industrial and commercial household him/herself shall be calculated based on 3 times of the local (Prefecture-level city) average social wage of the previous year, and the part not exceeding 5% of the calculation base shall be deducted according to the actual situation; no deduction allowed for the excessive amount.
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Q：
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For newly registered individual businesses, the collection method is verification collection. Can they enjoy the policy of halving Personal income tax for individual businesses?
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A：
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Yes. According to Article 1 of the Announcement of the State Taxation Administration on Implementing Personal income Tax Preferential Policies to Support the Development of Individual Businesses (State Taxation Administration Announcement No. 5 in 2023), Personal income tax will be levied by half on the part of annual taxable income of individual industrial and commercial households that does not exceed 1 million yuan based on the current preferential policies. All individual industrial and commercial households can enjoy it and do not differentiate by collection methods.
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Q：
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There are many individual businesses registered under one name, can they still enjoy the policy of halving Personal income tax for individual businesses?
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A：
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Yes. According to the Announcement of the State Taxation Administration on Implementing Personal income Tax Preferential Policies to Support Individual Businesses (State Taxation Administration Announcement No. 5 in 2023), if individual industrial and commercial households obtain business income from more than two sources, they need to consolidate the annual taxable income of individual businesses, recalculate the tax reduction and exemption, and refund the excess and supplement the deficiency when handling annual consolidated tax returns.
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