Answers to Common Questions About Invoice Issuance for Individuals (with Solutions)

1.Q: I am a farmer. If I sell vegetables I produced myself to an enterprise and apply to issue an invoice on my behalf, do I need to pay tax?

Answer：Self-produced agricultural products sold by agricultural producersExempt from VAT. For individuals or self-employed households engaged in planting, breeding, raising, and fishing, where the business items fall under agricultural tax (includingIncluding agricultural specialty tax) and animal husbandry tax, the "four industries" income obtained is temporarily exempt from individual income tax.It should be noted that self-produced and self-sold agricultural products can only be issued as ordinary invoices through the issuance service.

2.Q: A natural person provides labor services to an enterprise and receives remuneration, and applies to issue an invoice on their behalf. The invoice remarks state "Individual income tax shall be withheld by the payer in accordance with law." What does this mean?

Answer：According to the provisions of the Announcement of the Jiangsu Provincial Tax Service of the State Taxation Administration on Issues Concerning Individual Income Tax on Invoices Issued for Individuals upon Application (Jiangsu Provincial Tax Service of the State Taxation Administration Announcement No. 1 of 2019), starting from April 3, 2019, where individuals apply for invoice issuance for income from remuneration for labor services, income from author's remuneration, and income from royalties, individual income tax shall no longer be levied at the invoice issuance stage. The invoice-issuing entity (including tax authorities and entities entrusted by tax authorities to issue invoices) shall uniformly note in the remarks column of the invoice that "individual income tax shall be withheld and remitted by the payer in accordance with law."

3.Q: When a withholding agent pays labor remuneration income to a resident individual (the cumulative withholding method is not applicable), how is the withheld and prepaid individual income tax calculated?

Answer:According to Article 8 of the Announcement of the State Taxation Administration on Issuing the Measures for the Administration of Individual Income Tax Withholding and Filing (Trial) (Announcement No. 61 of 2018 of the State Taxation Administration), when withholding agents pay resident individuals income from labor remuneration, income from author's remuneration, and income from royalties, they shall withhold and prepay tax on a per-time or monthly basis according to the following methods:

For income from labor remuneration, author's remuneration, and royalties, the income amount is the balance after deducting expenses from the income; among these, the income amount of author's remuneration is calculated at 70 percent.

Deduction: when withholding and prepaying tax, where each income from remuneration for labor services, remuneration for manuscripts, or royalties does not exceed 4,000 yuan, the deduction is calculated at 800 yuan; where each income exceeds 4,000 yuan, the deduction is calculated at 20 percent of the income.

Taxable income: for income from remuneration for personal services, income from author's remuneration, and income from royalties, the amount of income each time shall be the taxable income for withholding and prepayment, and the tax amount to be withheld and prepaid shall be calculated. For income from remuneration for personal services, Individual Income Tax Withholding Rate Table 2 applies; for income from author's remuneration and income from royalties, a proportional withholding rate of 20 percent applies.

When resident individuals handle the annual comprehensive income settlement, they shall calculate the income amount of labor remuneration income, author's remuneration income, and royalties income according to law, incorporate it into the annual comprehensive income to calculate the tax payable, and refund the excess or collect the shortfall.

Individual Income Tax Withholding Rate Table (Applicable to Withholding and Advance Payment of Remuneration for Labor Services of Resident Individuals)

Specific calculation method:

For income not exceeding RMB 4,000 each time: withholding tax payable = (income − 800) × withholding rate − 0.

For income of RMB 4,000 or more each time: withholding tax payable = income × (1 − 20%) × withholding rate − quick deduction.

4.Q: If an individual has already issued an invoice on behalf of themselves and paid the tax, but a return occurs and the invoice no longer needs to be issued, how should this be handled? How can the tax be refunded?

Answer:Taxpayers may issue red-letter invoices through the Electronic Tax Bureau web portal "I Want to Handle Taxes" - "Invoice Use" - "Invoice Issuance on Behalf and Red-Letter Reversal" or the Electronic Tax Bureau App "Handle & Check" - "Invoice Use" - "Red-Letter Invoice Issuance on Behalf" module.

After the red-letter invoice is successfully issued, a tax refund can be applied for through the electronic tax bureau web portal under "I Want to Handle Taxes" - "General Tax Refund Management" - "One-Stop Tax Refund and Offset (Fees)" module.

Source: Jiangsu Tax

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