Cash Receipt is a system introduced in 2005 to prevent tax evasion through cash transactions after the promotion of credit card activation in 1999. The cash receipt system, newly established for fair taxation of the amount spent by private consumers, attaches a cash receipt issuance device to a credit card terminal to issue a cash receipt, and has been in effect as of 2022.
Reason for cash receipt
Reason for cash receipt 현금영수증 조회
Among the reasons for receiving cash receipts, the main purpose is to [prevent tax evasion]. This is to prevent tax evasion through cash receipts, because when consumers pay the price of goods sold by a business, the business must pay VAT.
Also, from a consumer’s point of view, the reason for receiving a cash receipt is that you can receive an income deduction of up to 3 million won per year.
Cash Receipt Income Deduction
Cash Receipt Income Deduction 이베이스매뉴얼
30% of the amount used in cash receipts is deducted from year-end tax settlement. However, not all consumption amounts used as cash receipts are subject to deduction, and the minimum amount is applied only to the amount exceeding 25% of the total salary (salary).
As an example, the standard for a person with an annual salary of 25 million won to receive income deduction through cash receipts is 6.25 million won, which is 25% of the 25 million won. In other words, the income deduction standard applies to the amount of KRW 6.26 million or more, and 30% of the amount is deducted from income.
If you look at the minimum amount of 25%, you may think that it is a fairly burdensome amount, but this includes credit cards, debit cards, department stores cards, and registered prepaid cards that can be deducted. Therefore, it has the advantage that it is not necessary to meet the criteria only with a cash receipt. ※ However, point cards, unnamed prepaid cards, lease fees, and various taxes are excluded from the income deduction.
Cash Receipt Income Deduction Limit Amount
Income deduction limit according to income
The maximum amount of income deduction for cash receipts varies depending on the total amount of salary (salary). First, income deduction is possible up to 3 million won if the total salary is (1) less than 70 million won, and (2) up to 2.5 million won if the total salary is between 70 million won and 120 million won ⑶ If it exceeds 120 million won, up to 2 million won is possible. It would be good to remember that part.
Cash Receipt Inquiry
1) How to check cash receipts
How to check cash receipt. First, access the National Tax Service Hometax, select ⑴ from the list displayed at the top of the website, ② from the inquiry/issuance list, select ⑶ Payment history (income deduction inquiry), and ⑷ log in.
2) How to check cash receipt
On the cash receipt inquiry screen, as shown in the picture above, you can inquire by day, week, or month. In addition, it would be good to note that only transaction details issued by cash receipt issuance methods such as mobile phone number, cash receipt card number, membership card number, etc. ※ You can check the date and time of the transaction, the name of the franchisee, the amount used, the method of issuance, and whether there is a deduction, so please refer to it.
Recently, more and more people are paying with credit or debit cards rather than cash when purchasing goods. But did you know that the deduction rate for cash receipts and debit cards is much higher than the deduction rate for credit cards? Therefore, using a cash or debit card rather than using a credit card is a way to get more tax deductions. Today, let’s take a look at the cash receipt system among them!
The cash receipt system was first implemented on January 1, 2005 to prevent tax evasion of business operators and improve transaction transparency. Consumers who have issued cash receipts are given income deduction benefits when making year-end tax settlement, and sellers can also receive VAT deductions.
The tax deduction rate for year-end tax settlement for consumers is 15% for credit cards and 30% for cash receipts and check cards. Workers can receive income deduction of 30-40% depending on where they use the cash receipt for the amount exceeding 25% of their total salary.
In the case of business operators, in relation to the VAT Act, general taxpayers can deduct 1.3% of the supply price, and simplified taxpayers can receive 2.6% tax deduction for food and lodging businesses. However, corporate businesses with an annual limit of 10 million won and individual business owners with a supply price of more than 1 billion won in the immediately preceding year are excluded from the tax credit.
If you look at the income deduction items classified by the National Tax Service, check cards, cash receipts, credit cards, traditional markets, public transportation, books, and performances are all ‘income deductions for credit card usage’.
However, there is a difference in the income deduction rate for each detailed item that falls under ‘Income deduction for the amount used, such as credit card’. If you look closely, it is 15% for credit cards, 30% for prepaid cards & check cards & cash receipts, 30% for books/performances (only for those earning less than 70 million won per year), and 40% for public transportation and traditional markets.
If you spend more than 25% of your annual salary, you can get a deduction of up to 3 million won for the additional use of 25% or more. However, the deduction limit increases by 1 million won each if there is a history of public transportation use, purchase of books and expenses for viewing performances (annual salary of 70 million won or less), and a statement written at a traditional market.
By adding an additional 3 million won to the 3 million won deduction limit for debit cards, credit cards, and cash receipts, the maximum amount that can be deducted from income tax under the current tax law is up to 6 million won. (Only for those with an annual salary of 70 million won or less)
From January 1, 2022, business operators in the table are obliged to issue a cash receipt even if the consumer does not request for a cash transaction of 100,000 won or more per transaction, including value-added tax. In addition, even if you do not know the personal information of the counterparty, you must issue it to the National Tax Service designated number 010-000-1234 within 5 days from the date of the transaction.
Whether or not the business is subject to mandatory issuance is judged according to the actual business, not the business on the business registration certificate. For example, if a business whose business is a clothing wholesaler sells clothing to consumers for cash, it is mandatory to issue a cash receipt.
The tax authorities have individually sent out a notice on the issuance obligation so that businesses added to the mandatory issuance business do not suffer any disadvantages because they do not know the details of the change.
In general, cash receipts can be issued through a credit card terminal, and in the case of a business that does not have a terminal, anyone can obtain a cash receipt without a separate approval process by applying for issuance of a cash receipt when registering as a business or registering as a Hometax member.
Application route: Access to Hometax of the National Tax Service ▶ Inquiry/Issue ▶ Issuance of cash receipts ▶ Application for home tax issuance ▶ Issuance of approved transactions
How to issue a cash receipt
1. Issued by mobile phone number
First of all, you need to register the mobile phone number to be used when issuing cash receipts in Hometax. You only need to do it once. [Hometax Homepage ▶ Inquiry/Issue ▶ Issuance of Cash Receipt ▶ Application for Hometax Issuance] After logging in, you can issue a cash receipt by presenting the registered mobile phone number when paying in cash.
2. Issued with multiple cards
As with mobile phones, if you register a specific card in Hometax and present the card when paying in cash, you can issue a cash receipt. The registration method is the same as receiving a mobile phone number.
Cards that can be registered: You can register up to 5 cards, such as check cards, credit cards, point accumulation cards, membership cards, and local currency cards.
What if I forgot to issue a cash receipt? Use the cash transaction confirmation application system!
You must have experienced a cash transaction and forgot to ask for a cash receipt! Did you know that even if you do not request a cash receipt after a cash transaction and you do not receive it, you can receive a cash receipt if you report it later for cash transaction confirmation?
The National Tax Service operates a cash transaction confirmation application system so that consumers who have not been issued a cash receipt can receive income deduction benefits.
What is the cash transaction confirmation application system?
In the case of a cash transaction, if a cash receipt is not requested and is not issued, if the consumer prepares the transaction proof and reports it within 3 years from the date of the transaction, the tax office confirms the income deduction.
The report subject is a case where a cash receipt has not been requested or the business has not been issued a cash receipt because it is not a cash receipt merchant.
The method of reporting is [Hometax website ▶ Consultation/Report ▶ Cash Receipt, Credit Card, Residential Rent Complaint Report] or submit a written report to the tax office having jurisdiction over the business place, attaching the transaction proof documents.
Income deduction benefits can be obtained if the fact of a cash transaction with an industry that is eligible for income deduction is proven and reported within 3 years. However, as this applies to cases where the consumer did not request a cash receipt or the business did not receive a cash receipt because it is not a cash receipt merchant, it is not subject to the reporting bounty.
Actively receive cash receipts in your daily life!
Since the introduction of cash receipts, the amount of issuance has continued to increase, contributing greatly to the training of the self-employed in taxation standards. The tax authorities announced that they will continue to promote the reporting bounty system and focus on managing those who violate the obligation to issue cash receipts! Therefore, it is important for businesses that fall under the mandatory issuance industry to issue issuance in good faith so as not to suffer disadvantages due to violation of the issuance obligation.