Employee Income Tax

question How do I register an Individual income tax reference number?

answer There are 2 methods of registering an income tax reference number:

  • You can register manually at the nearest IRBM branch by bringing along a copy of your identification document, remuneration statement and business registration for business cases.
  • You can register online through e-Daftar. Please visit http://edaftar.hasil.gov.my/

question Can I make a claim on medical expenses expended on myself?

answer You may claim medical expenses for serious diseases expended on you, your spouse or child up and medical expenses for parents. Such a claim must be supported by original receipts issued by a medical practitioner.

question Is there any limitation to the number of children entitled to child relief under the Income Tax Act?

answer There is no limit to the number of children, but relief will only be given for any dependent, unmarried child who at the time is:

  • below 18 years of age;
  • if above 18 years of age, is in receipt of full time education or is under articleship or indenture in trade or profession;

question I run a provision shop and from time to time sell provisions at the night market. Can I pay my income tax through the Monthly Tax Deduction (MTD) scheme?

answer No, the MTD is strictly for person (s) under employment contract only. If you are in business or are self -employed, you can pay your income tax through the bi-monthly installment payment scheme.

question Would a penalty be imposed if I delay the submission of my return form?

answer Yes, a penalty will be imposed if there is a delay in the submission of the return form. All return forms must be submitted within a period that has been stipulated (e.g. 30 April is last day to submit employment income tax).

question If I pay zakat or fitrah (religious tithes), can I make a claim to off-set it against the income tax payable?

answer Yes, you may if you are a Muslim. You have to forward the original receipts, which are on your name, to substantiate your claim.

question If I make a donation, can I make a claim for deduction from my income tax?

answer You may make a claim for deduction for the donation made but the donation must be made to a body or fund approved by the Director General. The approval (gazette notification) will be stated on the receipt.

question Where can I make my Individual income tax payment?

answer Income tax payment can be made at:

  • IRBM payment counter (Jalan Tuanku Abdul Halim, Kuala Lumpur, Kota Kinabalu, Sabah, & Kuching, Sarawak)
  • Counter (CIMB Bank, Public Bank, Maybank, RHB, Bank, Affin Bank, Bank Rakyat & Pos Malaysia)
  • ByrHasil. Please visit https://byrhasil.hasil.gov.my
  • Internet banking (CIMB Bank, Public Bank, RHB Bank, Maybank, Hong Leong Bank & Pos Malaysia)

question What is MTD / PCB?

answer Monthly Tax Deduction (MTD or PCB) which was introduced on 1st January 1995, is a system of tax recovery where employers make deductions from their employees’ remuneration every month in accordance with the MTD Schedule. This is mandatory, in that neither the employer nor employee has any choice in the matter. Any deviation from the requirements of the Income Tax (Deduction from Remuneration) Rules 1994 can only be upon written authorization from IRBM.

question How does MTD (PCB) differ from CP38 deduction?

answer MTD is an automatic deduction made every month, while CP 38 deduction arises only when IRBM issues a specific direction to the employer requiring him to make deductions of certain amounts for a specified number of months. Such CP 38 deductions are generally for settlement of outstanding taxes while MTD is on current income (Pay As You Earn – PAYE).

question What category of income is liable to MTD (PCB)?

answer MTD (PCB) is due only on employment income, i.e., on remuneration that arises from a master servant relationship, and this includes all payment other than benefits-in-kind [Section 13(1)(b)], accommodation benefits [Section 13(1)(c)] and reimbursements. Employment income subject to MTD includes salary, wages, commission, overtime, allowances, director’ fees, tips and bonuses arising out of exercising the employment. The employer adds up such income, subtracts the employee’s EPF contribution (subject to a maximum of RM500 per month or RM 6000 per year), and deducts the MTD in accordance with the relevant category in the MTD Schedule that the employee comes under. However, where the payment is bonus or other lump sum payment, a special formula has to be adopted to determine the MTD.

question How to calculate the MTD for director’s fees?

answer In cases where the Director’s Fees is paid monthly together with other monthly remuneration, both the relevant amounts must be added together in order to determine the MTD.
For cases where only Director’s Fees is paid monthly, the MTD is determined in the usual manner. Where a director is paid a monthly remuneration and he receives Director’s Fees in a lump sum, the MTD is calculated by using the Bonus Formula.

In instances where the director receives only Director’s Fees and paid in a lump sum, the relevant amount is divided by the number of months for which the payment relates. MTD is determined accordingly and then multiplied by the number of months.

question If a directive to employer to deduct tax (Form CP38) is received by the employer in respect of one of his employees, will the employer still have to deduct tax under the scheduler tax deduction scheme?

answer Yes, the Directive to employer to deduct tax (Form CP 38) will be issued for the purpose of recovering outstanding income tax only.

question If a taxpayer, on receiving his form J, found that MTD deductions are insufficient to cover the total income tax payable, what should he do?

answer He should pay the difference within 30 days from the date of the Notice of Assessment.

question When will the current year’s excess income tax credit be refunded to me?

answer You will receive your refund within

  • 30 working days from the date of submission if the submission is done within the due date through e-filing.
  • 3 months from the date of submission if the submission is done manually, within the due date.

question I have furnished my income tax returns before the final date of submission and I am due for a refund. Am i required to submit an application to claim the refund?

answer No. The refund will be processed within 30 working days for e-filers or within 90 working days for manual filers.

question Why am I yet to receive my refund as per the time frame stipulated in IRBM’s Client Charter?

answer The delay in the refund process may be due to the need for auditing of the return form that was furnished. Nonetheless, you are advised to contact the IRBM branch which handles your income tax file or the Customer Service Centre for further information.