This section of the form details non-taxable compensation. For minimum wage earners, specific boxes are filled. The 13th-month pay is exempt up to 90,000 pesos, with any excess becoming taxable. De minimis benefits within statutory limits and government-mandated deductions (SSS, GSIS, PhilHealth, Pag-IBIG) are also exempt.

This part covers the regular compensation, such as basic salary and any allowances like cost of living or housing. Supplementary compensation, including any 13th-month pay exceeding the 90,000-peso limit, is added to the regular compensation to determine the total taxable income subject to the graduated income tax table.

The summary calculates the tax due by subtracting non-taxable compensation from gross compensation. Using the applicable tax table for the year (e.g., 2022), the income tax due is computed. This amount is then compared to the taxes withheld by the current and previous employers to determine if there's any deficiency tax or if the tax is properly settled through substituted filing.

Employers are required to provide BIR Form 2316 to employees on or before January 31 of the succeeding calendar year. For terminated employees, the form should be provided before the close of the calendar year, on the day of the last payment of compensation. This applies to minimum wage earners and those whose compensation was not subject to withholding as well.

Beyond tracking withholding taxes, BIR Form 2316 is useful for loan applications, credit card applications, scholarship applications, and travel visa applications as proof of income. It is also essential for preparing annual income tax returns for mixed-income earners and for foreigners claiming income tax credit in the Philippines.

The BIR Form 2316, or Certificate of Payment or Tax Withheld, details an employee's compensation, tax identification number, exemptions, and taxes withheld. Employees should keep this document handy for various purposes as it correlates with income tax compliance.