What is PCB (MTD)
- PCB is the Malaysian monthly tax deduction - Potongan Cukai Bulanan. These monthly tax deductions are retained by your employer and paid over to the LHDN. PCB is designed to avoid the issues that come with requiring payment of a large sum at the end of the year.
How is PCB calculated in altHR
- Fully compliant with LHDN specifications and we are LHDN-approved.
- We are using the computerized calculation method and the tax rate is based on the latest LHDN tax rate.
What is "Computerized calculation method"?
There are 2 methods recognized by LHDN in calculating income tax - (i) LHDN calculator & (ii) LHDN PCB table; while the Computerized calculation method follows the LHDN calculator. The formula of the Computerized calculation as below:-
Annual Taxable income = Previous employment taxable remuneration + [ (Current month normal remunerations * Number of months remaining in the year)+ Additional remuneration ]
Annual Chargeable Income = Annual taxable income - Deductions - TP1 tax reliefs
Annual Tax = The annual tax is then calculated based on the annual chargeable income based on the LHDN tax rate.
Monthly PCB = [ (Annual Tax - PCB already paid previously within the same calendar year) /Number of months remaining ]- Zakat (if any)
-Normal remuneration is fixed pay items such as the monthly salary, fixed allowances or perquisites, and Benefit-in-Kind; while Additional remuneration is non-fixed pay items such as Bonus, non-fixed allowances/perquisites, leave pay and etc.
We will show you an example in the following:
Siew Lee started her new job at Company ABC on 1st May 2022, and she is being paid RM5,000 as the basic salary she has RM200 of fixed travel allowance (taxable pay item) every month.
Prior to joining Company ABC, Siew Lee was employed with another company from January 2022 to April 2022 - and she has a total taxable remuneration of RM16,000 and has paid a total PCB of RM306.60 during her previous employment with Company ABC.
Siew Lee is single hence the TP1 tax relief is RM9,000.
Therefore using the "Computerised Calculation" formula, it will be:
- Annual Taxable Income = RM16,000 + [(RM5,200*8 months)+ RM0] *8 months derived from the number of months from May 2022 to December 2022
So, Annual taxable income = RM57,600
- Annual Chargeable Income = RM57,600- RM0 -RM9000
So, Annual Chargeable Income = RM48,600
- Annual Tax
Since Siew Lee's annual chargeable income is RM48,600, referring to the LHDN tax rate, her income is at Category D (RM35,001-50,000); thus, her annual chargeable income has to be taxable at RM600 on the first 35,000; and the next 15,000 at 8% on every ringgit.
(Note: Tax rate taken for Assessment Year 2021 as it is the latest tax rate, kindly always refer to the latest tax rate by LHDN)
In Siew Lee's case,
(a) First 35,000 = RM600
(b) Next 15,000 = (48,600-35,000)*8% = RM13,600*8%=RM1088
So, Siew Lee's Annual Tax is (a) + (b) so equal to RM1,688
- Monthly PCB = [(RM1,688-RM306.60)/8 months] *8 months derived from the number of months from May 2022 to December 2022
So, Siew Lee's Monthly PCB is RM165.93
*Note: Based on LHDN's computerized calculation's guideline, less than RM10 Monthly PCB will show as RM0 - and no PCB will be deducted on that particular month.
Maintain Accurate PCB Calculation
There are a couple of values needed in order to obtain an accurate PCB calculation as per below:
- Employee income tax profile (Resident status, Marital status, Employee Disabled Status, Spouse Disabled Status, Number of children eligible for relief)
- Previous month's remunerations & statutory information
- Current month's remunerations & statutory information
Check How to Update Income Tax Information to ensure the system has the right information to calculate an accurate PCB.
Referring to Point 1 of the formula above, the previous months are in the calculation of taxable income. If you do not put in your previous pay run data then our system will not be able to ensure accuracy in calculating the PCB amount. Here's how to upload previous pay runs.
Check PCB calculation
Using altHR's payroll module will help you to ease the PCB calculation - and we provide accurate PCB calculations in accordance with LHDN rules, simply key in the pay item accordingly and the PCB will reflect immediately.
You can check your employee's PCB calculation by clicking on the "Income Tax" on the individual payroll page - hover your cursor to the "Income Tax" to show a brief calculation OR click the "Income Tax" to download a detailed calculation in an Excel file.
Method of PCB Payment
Effective 1st September 2019, LHDN will not accept PCB payments paid using cash or cheque at its payment counter or sent through post or courier. The employer may only use LHDN system via e-PCB, e-Data PCB, or e-CP39 which is currently accessible through the LHDN official website (www.hasil.gov.my).
The employer may manually enter 1 by 1 the PCB details into the LHDN system- however, altHR can help the employer to save time by providing the details of the bulk tax details in Txt file format, the employer may download the Txt file after processing payroll - where the employer can do bulk upload to the LHDN system: e-PCB/e-Data PCB/e-CP39 and make online payment accordingly (refer to LHDN's e-Data PCB user manual)
Deadline for PCB Payment
Please note that the employer must remit PCB payment on or before the 15th day of the following month (if the 15th is a holiday the deadline will be the last working day before the 15th), failure to do so will subject to a fine imposition of a minimum of RM200 but not more than RM20,000 OR 6 months of imprisonment or both.