What is CP38?
CP38 is an extra income tax deduction order by LHDN to instruct the employer to deduct a specific amount of tax that is on top of the regular PCB of the specific employee over a specific duration.
Purpose of CP38
CP38 usually occurs due to the employee having paid less income tax or unpaid taxes in the current year or the previous year.
Instead of paying the entire lump sum in one go, the employee may request installment plans from LHDN to repay the unpaid/short taxes in a few months from their salaries, or,
How should I know when to deduct CP38?
LHDN will post mail or email an official CP38 letter to the employer's registered address or employee's address or email, and the employer has to perform the deduction accordingly, and if the employee receives such the CP38, the employee is also responsible to inform the employee and provide the CP38 letter to the company.
Usually, the CP38 letter will clearly indicate the amount to be deducted and its duration (which will indicate which month) - see the sample letter below.
How do I deduct CP38 from an employee's payroll in altHR?
- Go to Payroll > Run Payroll > Select the desired employee > Manage
- Deduction > Add Item > Select CP38 from the Wage Type > Key in Amount > Confirm
How do I pay for CP38?
- If you pay PCB via Bank, the CP38 amount is already included in the LHDN text file/excel file downloaded
- If you are paying PCB via LHDN's portal (e Data PCB), the CP38 amount is already included in the LHDN text file >> Read more on How to download LHDN & e-CP39 monthly statutory files
Lastly, please don't forget to add the receipt number >> How to add receipt for PCB and CP38 for LHDN Payment once you've paid for the CP38.