Employees contribute PhP100 to Pag-Ibig monthly. This is mandatory. But if you wish to add more to your Pag-Ibig contribution, you may do so. I have an additional PhP100 monthly contribution. I don’t know if this is true but somebody must have told me that the additional contribution would allow me to get a bigger housing loan when I decide to get one. And the additional contribution is also tax-exempt. But things are changing.
The Bureau of Internal Revenue has issued Revenue Memorandum Circular #27-2011, revoking BIR Rulings Nos. 002-99 which provides tax exemptions to those who are placing additional contributions to Pag-Ibig, GSIS, SSS, Life Insurance, Pre-Need plan, etc.
The circular states “Since the law and implementing regulations do not categorically state that the exemption covers only the regular GSIS and Pag-Ibig contributions, it is safe to conclude that GSIS optional and Pag-Ibig 2 contributions are likewise excludible from the gross income of the taxpayer, and hence, exempt from income tax.”
The circular further states that many employees have contributed as much as PhP1,000 monthly to their Pag-Ibig 2 as a form of investment. The money being invested here is not taxed.
So now, your additional contributions would no longer be taxed-exempt. As for me, my additional contribution is only PhP100 a month. I doubt that I would even notice the tax that would be imposed on me.