Why PCB is different every month?

Modified on Wed, 9 Oct at 12:40 PM

PCB will be calculated for one annum every month and divided by the remaining balance of the months to get the current month's tax.


This calculation is affected by a few factors as below :



a) Accumulated Income


Check the accumulated income as the PCB only will be calculated when the chargeable income exceeds RM37,333 after the EPF deduction.


https://www.hasil.gov.my/en/individual/introduction-individual-income-tax/when-is-taxable/



b) Residency status


Kindly check below article link below to learn more about Income Tax Resident status:


How to decide Income Tax Resident Status for employee? : Knowledge Base (freshdesk.com) 



c) Marriage status ( Tax Category)


The marriage status of an employee will affect the tax calculation


https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-income/type-of-assessment/



d) Number of children

Based on the number of children and their educational status, the tax relief will be determined. Check the below article for more details:

Number of Dependent Children (Auto VS Manual) in Employee Profile : Knowledge Base (freshdesk.com) 



e) Types of Fixed / Additional Earnings


You may check it out what types of earnings are subjective to the tax as below :

Terms in Tax Deduction ( PCB / MTD) : Knowledge Base (freshdesk.com)



f) Tax Relief


Tax Relief plays a major part in reducing the taxed amount  in a month


Terms in Tax Deduction ( PCB / MTD) : Knowledge Base (freshdesk.com)

Why SOCSO Regarded As Relief in The EA Form? : Knowledge Base (freshdesk.com)  



g) Statutory Deduction ( KWSP / SOCSO + EIS) 


The statutory contribution plays a significant part in affecting the calculation of the tax amount 


Why SOCSO Regarded As Relief in The EA Form? : Knowledge Base (freshdesk.com) 




PCB formula is designated in a way to calculate chargeable income every month in case there are any salary changes throughout the months, and deducted with tax relief ( if any) and accumulated statutory deduction.



Example :


P ( Chargeable Income) = { Current Month Salary ( RM 4000 - RM 298 ( EPF) } + { Estimated salary for upcoming months ( RM 4000 - RM 298 x 11 months) }  + { tax relief ( RM 9000: self deduction) + RM 2000 ( 1 child) + RM 29.55 ( SOCSO + EIS) }



So the above formula has 3 parts, where it takes account of the,


current month's salary;

estimated salary for balance months, and ;

allowable deduction + tax reliefs.


Since the additional deduction of KWSP and SOCSO +EIS changes every month based on the earnings ( OT, allowances, etc) of the particular month, 


thus its accumulation will reduce/increase the chargeable income that determines the tax bracket.




To learn more about tax brackets, click the below link :

https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-income/tax-rate/

















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