JAKARTA (Oct 1): Indonesia plans to increase the tax-free income threshold for the first time in a decade, a senior minister said, a move aimed at increasing disposable income and spurring economic activity.

Currently, no income tax is payable on annual income of 54 million rupiah (US$3,020 or RM12,340) or less. The threshold is intended to protect low-income earners and was last adjusted in 2016.

Airlangga Hartarto, Coordinating Minister for Economic Affairs, said late on Wednesday that the government was calculating a "fix" to the threshold for next year, but gave no other details.

On Thursday, Airlangga said the plan would not require adjustment to the 2027 budget deficit target of 2.40% of GDP as the government will ensure budget efficiency and expects higher revenue from the energy sector.

An income tax exemption will be expanded to apply to all people earning less than 10 million rupiah per month. That currently applies only to workers in some labour-intensive and tourism industries.

The government will allocate around 31 trillion rupiah for cash and food handouts to low-income people in the final quarter of this year, Airlangga added.

A tax break on certain property sales will be extended to 2027, he said.

The new stimulus steps are in addition to a package announced earlier this year.

Uploaded by Magessan Varatharaja