PCB, or Potongan Cukai Bulanan, is a monthly tax contributing to employee tax deductions at the end of each financial year. Employers are responsible for retaining PCB and paying it to the LHDN. Thus, it is imperative to know how to pay PCB.
Introduced in an effort to support taxpayers who struggled to pay lump-sum taxes, PCB instead schedules monthly deductions for tax. It is considered a final tax, to be calculated after the inclusion of other taxes and financial aspects.
This article will provide a guide on how to calculate PCB, as well as how to make your PCB payment. Continue reading to learn more about this mandated monthly tax.
How to Calculate PCB?
LHDN has a set formula for payroll software to comply with when making PCB calculations. Employers have the task of calculating PCB for their employers, and are required to remit the accurate deductions to LHDN by the 15th of the following month.
PCB Calculation Formula
Here’s a simple breakdown of how to calculate PCB:
1. Calculate annual chargeable income: total annual income - eligible tax reliefs and deductions
2. Calculate annual tax based on chargeable income and current tax rates
3. Calculate monthly PCB by dividing annual tax by 12
PCB = (annual tax - PCB already paid)/Number of months remaining.
PCB Calculator Malaysia
To ease the calculation process, LHDN has a tool to help ensure your PCB is properly accounted for. Simply key in your details into the authorised PCB Calculator, and your PCB calculations will be made for you.
As PCB is a final tax, it should be calculated after other taxes and mandated financing schemes, such as EIS (Employee Insurance System), have been imposed.
Read More: What Is PCB: The Ultimate Guide
How to Pay PCB?
The payment for PCB is handled by employers, who retain the PCB taxes monthly before making the payment to LHDN. Employers have a few channels that can be used to make PCB payments.
Payment for PCB can be made online together with the submission of Form CP39. Other channels include online banking or via LHDN’s online facilities (e-PCB, e-Data PCB, or e-CP39 portals).
Like EPF and EIS contributions, the PCB is another aspect of local labour laws affecting both employees and employers. Thus, it is important for individuals to know what is PCB, and how it affects them financially.
Understanding various aspects of PCB, such as how to pay PCB and how to make PCB payments is standard knowledge for employers. Businesses operating in Malaysia should be mindful of the PCB and other local labour laws surrounding employment to avoid being penalised.