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 **RM****93.05**