PCB stands for Potongan Cukai Bulanan in Malay as known as MTD(Monthly Tax Deduction). There are 2 methods to calculate PCB, which are

Method

Based On

Where to Use

Accuracy

Non Computerized

LHDN PCB table

HR who prepare payroll without software

Less accurate

-It assumes the employee salaries are the same throughout the year. However, in more conditions, the salary may vary(eg. salary increment). So, it may not reflect the actual income tax payable.

Computerized

LHDN calculator

HR that uses payroll software

More accurate

-Based on actual income earned during the year.


In EasyWork, we are using computerized calculations to calculate PCB. Here are the calculation steps:

Step 1: Retrieve employee info

Step 2: Get the employee's past payroll records/previous employment records

Step 3: Get the current month's payroll details

Step 4: Identify the type of PCB computerized calculation



Step 1: Retrieve employee info

  • Residence status: Resident or Non-resident
  • Marital Status: Single or Married or Divorced/Widowed
  • Disabled Individual: Yes or No
  • Spouse Working: Yes or No
  • Disabled Spouse: Yes or No
  • Number of Children
  • Worker Type: Normal or Knowledge Worker or Returning Expert Program


Step 2: Get the employee's past payroll/previous employment records

If an employee worked before in the current year, either employment with the current employer or previous employer.

  • Remuneration: Total accumulated remuneration
  • EPF contribution
  • PCB amount (if any)
  • Tax relief deduction (if any)
  • Zakat paid(if any)


Step 3: Get the current month's payroll details

  • Normal remuneration(The amount is paid on a monthly basis)
  • Additional remuneration(Any amount that is paid in one lump sum)
  • EPF contribution
  • Tax relief deduction (if any)
  • Zakat paid(if any)
  • Payroll month


Step 4: Identify the type of PCB computerized calculation

The MTD calculation depends on the residence status of the employee. There are 2 types of residence statuses as follows: 

  • Non resident employee
  • Resident employee- Determine it is under which remuneration category: There are 4 remuneration categories (1) Normal remuneration, (3) Returning Expert Program(REP), (3) Knowledge Worker At Specified Region(KWASR), and (4) Additional Remuneration.


4(a) Non Resident Employee


Non resident calculation

= Total monthly remuneration * 30%

Remark

i) The tax rate is 30% on income earned during the year 2022

ii) The total monthly remuneration included basic salary, BIK, VOLA, and additional remuneration(if any).


Example

Mr John is a non resident. His gross monthly income is RM15,000 in the year 2021. He is also provided accommodation which his employer rents from the landlord for RM 3,000 a month. 


MTD for current month(Jan 2022)

= [(Monthly basic salary + BIK + VOLA + Additional Remuneration] x 30%

= (15,000.00 + 0.00 + 3,000.00 + 0.00) x 30%

= 18,000.00 x 30%

= 5,400.00


4(b) Resident Employee

PCB formulas are further categorized into 4 computerized calculations which are:

  1. Normal Remuneration
  2. Returning Expert Program(REP) 
  3. Knowledge Worker at Specified Region(KWASR)
  4. Additional Remuneration


4(b)(1) Normal Remuneration

This means fixed monthly remuneration paid to the employee.


Net PCB

= PCB for the current month - Zakat for the current month


To find PCB for the current month, the formula is Upon getting the value of P, the value of M, R, and B are determined based on Table 1 where the value of B depends on the category of employee.

To get the value of P, here is the calculation:

P = [ ∑(Y – K) + (Y1 – K1) + [(Y2 – K2) n] ] – [ D + S + DU + SU + QC + (∑LP + LP1) ] 

 

To ease the calculation of getting the value of P, we split it into parts 1 and 2. Let’s dive in to calculate the 1st half.

Then, count the 2nd half.

After that, subtract the 2nd half from the 1st half. Hence, you get the P value.


P = [ ∑(Y – K) + (Y1 – K1) + [(Y2 – K2) n] ] – [ D + S + DU + SU + QC + (∑LP + LP1) ]

To ease the calculation of getting the value of P, we will split it into parts 1 and 2. Let’s dive in to calculate the 1st half.



4(b)(2) Returning Expert Program(REP) and

4(b)(3) Knowledge Worker at Specified Region(KWASR)

  • REP and KWASR share the same computerized formula.
  • Shall be taxed at a rate of 15% of its chargeable income.
  • If the chargeable income <= RM35,000, the employee is eligible for individual and spouse rebates.
  • The duration of the incentive is for 5 consecutive full years of assessment.


Net PCB

= PCB for the current month - Zakat for the current month

To find 'PCB for the current month', the formula is

Then, follow the exact steps as shown in (1) Normal Remuneration to get P. The value of T is determined based on Table 2, where the value of T depends on the category of employee.


4(b)(4) Additional Remuneration


Additional remuneration is any additional payment on top of the normal remuneration for the current month. It's either paid in one lump sum, periodical, in arrears, or non-fixed payment.


Such as:

  • Bonus/incentive
  • Arrears of salary or any other arrears paid to an employee
  • Employee’s share option scheme (if employee opts for PCB deduction)
  • Tax borne by employer
  • Gratuity
  • Compensation for loss of employment
  • Commission (not paid monthly)
  • Allowance (not paid monthly)
  •  

Hence, PCB should calculate based on the current year's additional remuneration formula and reported together with the current month’s PCB in CP39 text file format.

If you are interested in the detailed calculation of additional remuneration, please go to https://phl.hasil.gov.my/pdf/pdfam/Spesifikasi_Kaedah_Pengiraan_Berkomputer_PCB_2022.pdf (page 11-13)(page 45-48 for the example calculation). Our payroll system is fully developed in accordance with computerized calculation specifications stated by LHDN.