Senior and PWD discount: what the seller records and deducts
Reviewed by Mar Angelo N. Revelo, founder of PhilForms.
This page is for the owner or bookkeeper of a store, pharmacy or restaurant that gives the 20% discount. At the end you will know what goes in your books, how VAT comes in, and how the discount reaches your income tax return. It does not tell you whether a given item is covered: read the law's list for that.
Who this applies to
Senior citizens get at least 20% off and VAT exemption on the goods and services listed in RA 9994, section 4. Persons with disability get the same on the list in RA 10754, section 1, "if applicable" on the VAT.
What to keep for every sale
For a senior citizen, RR 7-2010, section 7 requires a separate and accurate record with:
- the senior citizen's name - the OSCA ID - gross sales or receipts - the sales discount granted - the date of the transaction - the invoice number
Keep the same record for a PWD sale, with the PWD ID number. The law requires "proper documentation" for the deduction; we did not open a regulation that lists the PWD columns, so ask your accountant.
How the sale is written down
The same section says the seller "must record its sales inclusive of the discount granted". Your reported sales are the undiscounted selling price, and the discount is shown as a deduction, not taken off sales.
RR 7-2010's own example is a VAT-registered drug store selling ten pieces at ₱5.00 each, VAT-exempt: ₱50.00, less the 20% discount of ₱10.00, so the senior citizen pays ₱40.00. It says the price "must be net of VAT because the sale to Senior Citizens is exempt from VAT".
How you claim it
The discount is claimed as a tax deduction from gross income, for the same taxable year it was granted (RA 9994, section 4; RR 7-2010, section 7). PWD discounts follow the same idea under RA 10754, section 1.
It is an itemized deduction, so it can only be claimed if you do not opt for the Optional Standard Deduction for that quarter or year (RR 7-2026). The deduction goes on your annual return: BIR 1701 for an individual, BIR 1702-RT for a corporation under the regular rate.
If you sell medicines
RR 7-2026 amended RR 7-2010 for pharmaceutical products. Retailers, manufacturers, distributors and wholesalers may agree to share the burden of the senior citizen discount under the Department of Health's arrangements. If you share it, your deduction cannot exceed your own share under the agreement.
Mistakes that cost the deduction
- Taking the Optional Standard Deduction, then also claiming the discount. - Reporting sales net of the discount. - No separate record of the name, ID and invoice number. - A pharmacy deducting the full discount when a supplier paid part of it.
Questions
Can I claim the discount if I use the 40% Optional Standard Deduction?
No. RR 7-2026 says the deduction may only be claimed if the seller does not opt for the Optional Standard Deduction for the quarter or year.
I am not VAT-registered. What changes?
We found no rule that spells this out. The law's wording is exemption from VAT "if applicable", and the examples we read are for a VAT-registered store, so ask your accountant or your RDO.
Does the 2026 amendment change what I give the customer?
Not in what we read. RR 7-2026 repeats the 20% and changes how sellers share and deduct it among themselves. It covers the senior citizen discount; we did not find the same text for PWD sales.
Does PhilForms keep this record for me?
No. PhilForms fills your forms; the sales record stays in your own books.
Last checked 2026-10-31. Not affiliated with BIR, SSS, PhilHealth, Pag-IBIG or any government agency.