In this article, we will look at an example of calculating PCB/MTD. PCB stands for Potongan Cukai Bulanan in Malay as known as MTD(Monthly Tax Deduction). It involves 4 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
Example
PCB for Feb 2022. Below is detailed information about Mr. Lim.
- He is a Malaysian citizen.
- He is married and his spouse is working.
- He has 2 children under the age of 18
- His gross monthly salary is RM5,000.
- He is entitled to a monthly fixed allowance of RM200. It is tax exempted.
Step 1: Retrieve employee info
- Residence status: Resident
- Marital Status: Married
- Disabled Individual: No
- Spouse Working: Yes
- Disabled Spouse: No
- Number of Children: 2 children under the age of 18
- Worker Type: Normal
Step 2: Get the employee's past payroll/previous employment records
| Item | Amount(RM) |
|---|---|
| Accumulated PCB paid | 16.65 |
| Accumulated income from previous month | 5,000 |
| Accumulated EPF | 550 |
| Accumulated tax relief deduction | 0 |
| Accumulated Zakat paid | 0 |
Step 3: Get the current month's payroll details
| Item | Amount(RM) |
|---|---|
Monthly wage | 5,000 |
EPF contribution | 550(with a rate of 11%) |
| Additional remuneration(eg bonus) | 0 |
Additional tax relief deduction | 2,500 |
Fixed allowance | 200 (Exempted) |
| Zakat | 0 |
| Payroll month | February |
Step 4: Identify the type of PCB computerized calculation
It belongs to PCB computerized calculation for Normal Remuneration.
PCB for current month = [ [(P – M) x R + B] – (Z+ X)] ] / (n+1)
There are 4 steps to calculating PCB using computerized calculation
4(A) Determine category of employee
4(B) Determine chargeable income for a year [P]
4(C) Determine monthly MTD for net normal remuneration
4(D) Calculate the Net PCB
4(A) Determine category of employee
Category 3, since Mr. Lim is married and his spouse is working.
4(B) Determine chargeable income for a year [P]
i) Firstly, determine the value of K2
K2
= Estimated balance of total contribution to EPF or other Approved Scheme for the balance of the qualifying month
Where n = 10(as we count the MTD for Feb)
= [ [4000.00(max limit) - (K + K1 + Kt)] / n ] or K1, whichever is lower
= [ [4000.00 - (550.00 + 550.00 + 0.00)] / 10 ]
=290.00
K1 is RM550 which is higher than the estimated(290.00). So, K2 is RM290.00.
ii) Secondly, determine num of qualifying children(Q).
2 children below age 18 => entitled to 2
Q= 2
iii) Finally, calculate the value of P.
P = [ ∑(Y – K) + (Y1 – K1) + [(Y2 – K2) n ] ] – [ D + S + DU + SU + QC + (∑LP + LP1) ]
= [ ∑(5000.00 – 550.00) + (5000.00 – 550.00) + [(5000 – 290.00) x 10 ] ] – [9000.00 + 0.00 + 0.00 + 0.00 + 2000.00(2) + (0.00 + 2500.00) ]
= 40500.00
4(C) Determine monthly MTD for net normal remuneration
Upon getting the value of P, the value of M, R, and B are determined based on Table 1.
P = 40500.00
So M= 35000, R = 8%, B = 600 (Employee belongs to Category 3)
PCB for current month
= [ [(P – M) x R + B] – (Z+ X)] ] / (n+1)
= [(40500.00 - 35000.00) x 0.08 - 600.00] - (0.00 + 16.65)] / (10+1)
= 93.03
Check the rule: PCB before zakat deduction below RM10 should reflect RM0. Otherwise, deduct as per PCB calculation. Hence, PCB for the current month is RM93.03.
4(D) Calculate the Net PCB
Net PCB
= PCB for current month – Zakat/Fi/Levi for current month
= 93.03 - 0
=93.03
Check the rule: PCB after zakat deduction below RM10 should reflect RM0. Otherwise, deduct as per PCB calculation. Hence, Net PCB is RM93.03.
Finally, rounded up the amount to the nearest 5 cents.
Net PCB is RM93.05