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You must be wondering what is income tax PCB Malaysia in payslip. Monthly Tax Deduction, better known as PCB income tax (potongan cukai bulanan in Malay), is an amount deducted monthly from an employee’s salary. It is paid to the Inland Revenue Board (LHDN) for the purpose of employee income tax payment.
Paying Income Tax for the First Time? Here’s What You Need to Know About PCB Deductions (Malaysia PCB)
Actually, many, especially the younger generation, are still confused about monthly tax deduction (income tax PCB Malaysia). Some assume that income tax has already been taken care of when their salary is deducted each month.
This misunderstanding has led to some taxpayers only realizing they still owe taxes or have tax arrears when they receive notices from the LHDN. If you’re still not quite clear about PCB in Malaysia, this comprehensive guide will assist you in understanding all things related to PCB deduction Malaysia.
This includes details about who needs to pay PCB Malaysia, how much salary is subject to PCB, and more.
1. PCB Meaning Malaysia: What Is PCB Tax Malaysia?
You might be wondering PCB meaning in payslip, right? PCB contribution, also known as PCB monthly deduction, is the deduction of employees’ income for the payment of the current year’s income tax. It serves as a monthly tax deduction mechanism by the employer.
In other words, the employer will deduct a certain amount from your salary to cover your PCB each month if you exceed the prescribed PCB deduction threshold. This employee PCB can be seen as an advance annual tax payment scheme or an installment tax payment scheme.
This scheduled tax deduction aims to prevent you (as a taxpayer) from feeling burdened when you have to settle a large annual tax amount all at once.
2. PCB Tax Malaysia: Who Need To Pay PCB?
According to the LHDN website, individuals with annual employment income exceeding RM34,000 after EPF deductions need to register for an income tax file first. Once you have an income tax file, if your salary exceeds the PCB deduction rate, then you should see a PCB deduction on your payslip.
The following are the minimum salary to pay PCB in Malaysia:
- Single Individual – RM2,851 after EPF deduction;
- Married Individuals and Unemployed Spouses – RM3,851 after EPF deduction.
3. PCB Amount: How To Calculate PCB Malaysia?
So, how much is PCB deduction in Malaysia? Basically, employers will calculate the annual taxable income by taking the annual income amount and deducting any eligible tax exemptions or deductions. The annual tax amount will be calculated based on the prevailing tax rates for the current tax year.
This amount will then be divided by 12 to get the monthly value for the PCB deduction. For example, let’s say Ali’s salary is RM34,000 per year or RM2,833.34 per month. Is Ali eligible for a PCB deduction?
According to the PCB calculation, Ali is still not eligible for a PCB deduction. This is because Ali’s annual salary after EPF deductions is still not sufficient to qualify him for PCB deduction.
4. How Much Is The Minimum Salary To Pay PCB in Malaysia?
What is the minimum salary to pay income tax in Malaysia? Minimum salary for PCB deduction can be calculated using the Computerized Salary Computation Method or by referring to the e-PCB schedule through the e-CP39 on the HASiL website.
Salary how much need to pay PCB? Follow the information below to find out PCB minimum salary in Malaysia. Let’s take the example of Ali above. Ali receives a salary increase due to his outstanding performance. Ali’s new basic salary is as follows:
- Basic Salary: RM3,184
- EPF Deduction (11 percent): RM350.19
- Net Salary: RM2,833.81
This means Ali’s new annual salary after EPF deduction is RM34,005.72 (RM2,833.81 x 12 Months). This qualifies Ali for PCB deduction.
5. PCB Deduction Rate: How Many Percent PCB Deduction?
How much is the PCB percentage of monthly tax deduction? In essence, the PCB rate varies for each individual depending on specific categories. The PCB paid to LHDN is determined by considering several other factors such as:
- Spouse’s employment status;
- Number of children and dependents;
- EPF contribution;
- Tax deductions.
Let’s take the example of Ali mentioned earlier – Ali, a single individual with a monthly income of RM3,184. After EPF deductions, Ali needs to pay PCB every month. According to the PCB deduction table, only RM1 per month is deducted from salary.
6. Monthly Tax Deduction: PCB Table 2023
For single individuals, you need to make PCB contributions when your basic salary exceeds RM3,184 per month. In Ali’s case, the PCB deduction for Ali is only RM1 per month based on the Monthly Tax Deduction Table (PCB Deduction Table 2023).
But, what about individuals who are married or have dependents? What is the percentage of PCB deduction?
- For married individuals (spouse not working), the minimum salary to pay PCB is RM4,001 (with a PCB rate of RM50.40 per month or more depending on the salary);
- For married individuals (spouse not working and one child), the minimum salary is RM4,166 with a monthly tax deduction rate of RM50.25;
- For individuals including both spouses working, the minimum salary eligible for tax deduction is RM3,141 (with a monthly PCB deduction rate of RM1);
- For married individuals where both spouses work and have one child, the minimum salary subject to PCB deduction is RM3,311 (with a monthly tax deduction rate of RM1.10).
Essentially, the amount of PCB deduction will vary based on categories and your minimum salary. You can refer to the LHDN website for more information.
7. Income Tax Rebates
These monthly LHDN tax deductions help lessen the burden of paying taxes all at once when the actual tax is calculated. You can also take advantage of government tax rebates – you can claim tax refunds for taxes you’ve already paid while filing your e-filing.
- Self-Education Fees – RM7,000;
- Personal Computer Purchase, Reading Materials, Smartphone, and Tablet – RM2,500;
- Serious Illness Medical Expenses – RM8,000;
- Dependent Children Below 18 Years Old – RM2,000;
- Life Insurance and EPF (Retired Civil Servants) – RM7,000;
- Life Insurance/Takaful (Non-Civil Servants) – RM3,000;
- EPF and Approved Investment Scheme – RM4,000;
- Education and Medical Insurance – RM3,000;
- SSPN – RM8,000.
Purchase Health Insurance and Life Insurance and Enjoy Income Tax Rebates
This information can be particularly useful for new taxpayers in planning their finances more effectively. Employers who fail to deduct Monthly Tax Deductions may be subject to a minimum compound of RM200 and not exceeding RM20,000. They could also face imprisonment for up to six months, or both.
Employers who neglect to deduct or withhold PCB payments to LHDN can also be charged in civil court. Therefore, if you find that PCB deductions are not included in your salary slip, it’s recommended to report it to the authorities. This will ensure appropriate action is taken.
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