Senior citizen and PWD discounts: what sellers have to record for the BIR
Giving the discount is only half the job. The BIR cares about how you document it, because that documentation is what lets you claim it back.
If you sell food, medicine, transport, or most consumer services, you are required by law to give a discount to senior citizens and to persons with disability (PWD). Most business owners know that part. Fewer know that the discount is also a tax matter, and that sloppy paperwork means you absorb the whole cost yourself.
The discount is not a donation
When you give a mandated discount, you are not simply losing that money. The law lets a business treat the discount as a deduction, which reduces the income you are taxed on.
But a deduction is only as good as its proof. The BIR does not take your word for the total. It looks for records that connect each discounted sale to a real, verified customer who was entitled to it.
No proof, no deduction. You still gave the discount, and now you also pay tax as if you had charged full price.
What the receipt has to show
The receipt is the core document, and a plain receipt with a lower total is not enough.
For each discounted sale, the receipt or invoice should identify the customer by name, show the identification number from the senior citizen or PWD card, and show the discount separately from the selling price rather than folded into a single lower figure.
That last point matters more than it sounds. If the discount is invisible on the receipt, there is nothing to trace later. The sale simply looks like a cheap sale.
Where the discount interacts with value added tax (VAT), the sequence of the computation also matters. Qualified sales are treated differently from ordinary ones, and doing the arithmetic in the wrong order changes both what the customer pays and what you report.
The record the BIR wants to see
Beyond individual receipts, businesses are expected to keep a running record of discounted transactions. In practice this is a separate log or book listing the date, the customer name, the identification number, the amount of the sale, and the discount given.
Two habits make this painless.
Log at the point of sale, not at the end of the month. Reconstructing names from memory does not work and looks exactly like what it is.
Match the log to your books. The total in your discount record should agree with the deduction you claim. When those two numbers disagree, the smaller one usually wins during a review.
Where businesses get into trouble
Accepting a photo of a card. Requirements about acceptable identification are specific, and a screenshot is a weak record.
Refusing or trimming the discount. Beyond the tax consequences, this carries penalties under the laws that created the benefit.
Applying it to the wrong purchases. Not every item in every transaction is covered, and giving it where it does not apply creates a deduction you cannot support.
Letting staff decide. If three cashiers handle it three ways, your records will show it. One written instruction, followed by everyone, prevents most of these problems.
Get the treatment right before it costs you
The precise identification requirements, the covered goods and services, and the computation order are set out in the official rules and are updated from time to time. Checking once and training your staff on it is far cheaper than discovering the gap during an assessment.
Ask AskOnward how mandated discounts should appear in your receipts and books. The answers are grounded in the official BIR rules, with the source shown, at askonward.app.
This article is for general information and is not affiliated with the government. For official forms and the latest rules, see the Bureau of Internal Revenue at bir.gov.ph.