Malaysian Personal Income Tax Guide 2016. This series of guides will provide you an explanation of the basics and set you up on the journey of filing your taxes.

1. Personal Income Tax
2016 Guide
PART 7

2. How Does Monthly Tax Deduction
(MTD/PCB) Work In Malaysia?
 After all the calculation, and if you are still shocked with the
amount of tax you would have to pay, don’t worry.
 You may be eligible to get an income tax return after the
Monthly Tax Deduction (MTD), also known as PCB.

3. How Does Monthly Tax Deduction
(MTD/PCB) Work In Malaysia?
 MTD is a mechanism in which employers deduct monthly tax
payments from the employment income of their employees.
Employers rely on an employee’s personal data submitted to
their Human Resource (HR) department to compute monthly
MTDs.
 Therefore, these monthly deductions are net of personal relief,
relief for spouse with no income, child relief and zakat payments.

4. MTD as final tax
 Starting from Malaysia income tax Year of Assessment 2014 (tax filed
in 2015), taxpayers who have been subjected to MTD are not required
to file income tax returns if such monthly tax deductions constitute
their final tax.
 However, they should still file if they want to reduce their taxable
income through reliefs. This is more a convenience factor to allow
those who did not file to not have negative records.

5. However, three criteria must be met:
 Such employee must receive their employment income
prescribed under Section 13 of the Income Tax Act 1967;
 MTD of such employee must be made under the Income Tax
(Deduction from Remuneration) Rules 1994; and
 Such employee must serve under the same employer for a
period of 12 months in a calendar year (i.e. Jan 1 – Dec 31).
To ensure your MTD is your final tax, you may need to request for
other reliefs to be deducted. To do so, you will need to
submit Income Tax Form TP1, where you can state other tax reliefs
that you are entitled to, to facilitate the computation of MTD.

6. Reliefs that can be included in the form
includes:
• Medical treatment, special needs and
carer expenses for parents,
• Basic supporting equipment for use by
the disabled employee, spouse or
parents.
• Self-education fees,
• Medical expenses on serious diseases,
• Complete medical examination,
• Purchase of books, magazines and
journals,
• Purchase of personal computer (once
every 3 years),
• Net deposit in Skim Simpanan
Pendidikan Nasional (SSPN),
• Purchase of sports equipment,
• Alimony payment to ex-wife,
• Life insurance,
• Education/medical insurance,
• Deferred annuity,
• Interest on housing loan (subject to
meeting stipulated conditions), and
• Zakat payment (only if not deducted
through MTD already).

7. Once you have submitted the form to LHDN and a copy to
your employer, your employer will have to remit the amount
deducted to Inland Revenue Board Malaysia (IRBM), also
known as LHDN, every month in accordance with Income Tax
(Deduction and Remuneration) Rules 1994.
If your employer deducts MTD from your salary every month,
over the course of 12 months – you may find yourself
overpaying your taxes when you file it.

8. Thank You…
SOURCE : WWW.IMONEY.MY/ARTICLES/INCOME-TAX-2016/WHAT-
IS-INCOME-TAX-REFUND
PART 8 COMING SOON