MTD stands for Monthly Tax Deduction, also known as Potongan Cukai Bulanan (PCB). Hence, you may realize that MTD and PCB can be used interchangeably.
MTD/PCB is a series of monthly deductions that go towards your tax payment in relation to your employment income. These monthly deductions are retained by your employer and paid over to the Inland Revenue Board (LHDN).
What are the Deadline and Penalties to pay PCB?
If an employer fails to pay PCB on or before the 15th of the following month (if the 15th is a holiday the deadline will be the last working day before the 15th) can be fined and/or imprisoned .
The penalty is a minimum of RM 200 and not more than RM 2,000 or 6 months imprisonment or both. An employer who does not deduct MTD or deducts but fails to remit the MTD to IRBM can be prosecuted in a civil court. With this, the MTD not deducted becomes a debt to the Government.
How Do I Pay PCB?
With the submission of Form CP39, which is a statement of monthly tax deduction PCB payment should be made.
Please note that, with effect from Sept 1, 2019 employers will need to submit Form CP39 online to the (LHDN) Inland Revenue Board of Malaysia.
Methods available for PCB submission
1. Internet Banking
2. LHDN Online Facilities
- e-CP39 – For manual submission of monthly tax deductions of unregistered users and for one time submissions only.
- e-PCB – For manual submission of monthly tax deductions of registered users. Once an employer is registered on the website, they will need to enter all the employee’s details manually. All the data entered will be auto-saved for the next submission. New employee data will need to be adjusted manually.
- e-Data PCB – For automated submission of monthly tax deduction of registered users. Once the user is registered in the portal, instead of manual data adjustments employer can simply upload the PCB file.
3. Online through FPX
Do I need to file tax returns?
After EPF deduction if you earn a minimum of RM 34,000 annually, then you must file a tax return, unless you are exempted from doing so under the conditions set out below.
If you meet the following conditions you have an option not to file a tax return as the PCB/MTD paid will be considered as final tax:
- Your only source of income is your employment income; and
- you have been working for the whole tax year with the same employer; and
- your employer has been deducting PCB from your salary correctly; and
- your taxes are not borne by your employer; and
- you have not opted for a joint assessment with your spouse.
If any of the above conditions are not met, then the exemption does not apply and you must file a tax return.
Many mistake MTD/PCB as a final tax. Take care to note that MTD/PCB are tax deductions that are part of the final tax; however, your MTD/PCB will not be considered a final tax if the above conditions aren’t met.