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When you receive your monthly pay slip as a private sector employee, you may notice that a certain amount has been deducted as PCB. PCB or Monthly Tax Deduction is the sum of money taken from your salary each month to cover your income tax PCB payments to LHDN. To fully understand what this deduction means, it is essential to learn about PCB meaning in payslip, how much is required to pay and how the calculations are made.
What Is PCB Tax? All You Need to Know About PCB Income Tax in Malaysia
There is a misconception to assume that PCB deductions automatically cover one’s income tax responsibilities. As a result, some people may only realize their outstanding tax liabilities when they receive a notice from LHDN, forcing them to pay a large amount and have to use their own savings such as retirement savings or their own EPF savings simply to settle the tax debt with the LHDN. If you do not want such cases to happen to you, it is important that you know these three things about PCB:
1. What is PCB Malaysia?
So, you might be wondering “what is PCB tax?” or “PCB meaning?”. PCB stands for Potongan Cukai Bulanan refers to the monthly tax deduction from your compensation income to pay for your income tax. This deduction is compulsory for private employees, and your employer will deduct the necessary amount from your salary every month.
This deduction aims to prevent you as a private employee from feeling burdened when having to pay a large annual tax amount all at once at the end of the year. You can consider this PCB as a scheme to pay your annual tax in advance or pay in installments. However, it should be noted that you should make sure that you fill out e-filing when it comes to paying taxes. By doing this, you will be able to identify whether there is an overpayment or insufficient tax payment with the LHDN.
Who Needs to Pay PCB Malaysia: PCB Minimum Salary, How Much Salary Need to Pay PCB?
Will you be automatically subject to this deduction once you start working? Not necessarily because because there is a minimum salary that you have to have for PCB. So, “salary how much need to pay pcb?”. Your salary should exceed the conditions that have been set. The following is the amount of minimum salary to pay PCB in Malaysia:
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- Single Individual – RM2,851 after EPF deduction;
- Married Individuals and Unemployed Spouses- RM3,851 after EPF deduction.
2. PCB Income Tax, How Much is PCB Deduction Malaysia?
How is the amount of Scheduled Tax Deductions determined? Several factors are taken into account when calculating the PCB paid to the LHDN, including:
- Spouse’s employment status;
- Number of children and dependents;
- EPF contribution;
- Tax deductions.
Basically, your employer will calculate your annual taxable income by taking your total annual income and deducting any tax reliefs or deductions you are entitled to claim. Your annual tax amount will then be calculated according to the tax rate for the current tax year. This amount will then be divided by 12 to get the monthly figure for your PCB deduction.
- Calculate annual taxable income: Total annual income – eligible tax reliefs and deductions;
- Calculate annual tax based on taxable income and current tax rate;
- Calculate the monthly PCB by dividing the annual tax by 12 months.
PCB Table 2023, Use PCB Calculator to Know Your PCB Income Tax Deduction
Your Monthly Tax Deduction amount is determined by the PCB table Schedule. For example, Ali has a monthly salary of RM5,010 and is single. Based on the Monthly Tax Deduction Table, the amount of PCB that will be deducted from Ali’s salary is RM163.75. To get a clearer idea, you can refer to PCB calculator that are available online.
3. How Employers Explain PCB, Pay PCB Online
To ensure that the payment for the Scheduled Tax Deduction is made correctly, all cheques, postage, and remittances must be addressed to the Director General of LHDN. To pay PCB online, it is necessary to submit the CP39 form along with the payment. Here’s a guide on how to make the payment on behalf of the employer.
1. e-PCB or e-Data LHDN
Employers can also use the e-PCB or e-Data PCB facility for the purpose of submitting CP39. Payment of PCB to IRB can be made through FPX through one of the following banks:
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- Bank Islam;
- Public Bank;
- RHB Bank;
- AmBank;
- Maybank;
- Hong Leong Bank;
- CIMB Bank.
2. LHDN
Employers can make PCB payments at the LHDN payment counter in the form of checks, money, money transfers and bank drafts.
3. Bank
Payment in cash or check together with form CP39 in diskette format over the counter can be made at the following banks:
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- Public Bank;
- CIMB Bank.
4. Pos Malaysia
Employers can also make payments in cash together with form CP39 in diskette format at the Pos Malaysia counter.
5. Online Banking
Some banks offer bulk payment services. All processes are usually carried out online. Contact your bank for more information. If you make a contribution through online banking, there is no need to submit the CP39 form at any counter.
PCB Malaysia: Make Sure Your Employer Carries Out The Responsibility
Employers who fail to pay the Monthly Tax Deduction can be subject to strict action such as a minimum compound of RM200 and no more than RM20,000 or up to six months in prison or in certain situations, both. Not only that, the employer not deducting the payment or rejecting the PCB payment to the LHDN can also be prosecuted in the civil court.
Since the PCB’s objective is to reduce your burden by making monthly tax payments to the LHDN in advance, you still need to calculate the earned income and the actual tax to be paid when settling your annual tax later. Therefore, if you find that PCB deduction is not included in your payslip, you are advised to report to the authorities immediately to take appropriate action.
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