PCB Malaysia: What Is Monthly Tax Deduction and How to Check If You're Overpaying
Understand how PCB works, what's deducted from your salary, and how to reduce your monthly deduction legally.
What Is PCB?
PCB (Potongan Cukai Bulanan) is not an additional tax. It is an advance payment of your annual income tax, deducted monthly by your employer and sent to LHDN on your behalf.
At the end of the year, when you file your tax return, your actual tax payable is calculated. If more PCB was deducted than your actual tax, you get a refund. If less was deducted, you owe the balance.
How Is PCB Calculated?
Your employer calculates PCB using a formula provided by LHDN:
- Monthly gross salary × 12 = estimated annual income
- Subtract standard reliefs (individual RM9,000, EPF, SOCSO)
- If married with children, subtract spouse and children reliefs
- Apply the progressive tax brackets to chargeable income
- Subtract rebates if eligible
- Divide annual tax by remaining months = monthly PCB
What's Deducted From Your Salary
| Deduction | Rate | Notes |
|---|---|---|
| EPF (Employee) | 11% | Standard; 12% optional; 5.5% for age 60+ |
| SOCSO (Employee) | ~0.5% | Capped at RM6,000 salary |
| EIS (Employee) | 0.2% | Capped at RM6,000 salary |
| PCB | Varies | Based on income and reliefs declared |
Why You Might Be Overpaying
PCB is calculated based on limited information. Your employer only knows your salary details and whatever you've declared on your TP1 form. They don't know about:
- Parents' medical expenses (up to RM8,000)
- Lifestyle spending — books, gadgets, internet (up to RM2,500)
- SSPN contributions (up to RM8,000)
- PRS contributions (up to RM3,000)
- Medical/education insurance premiums (up to RM4,000)
- Children in university (RM8,000 each)
- Domestic travel expenses (up to RM1,000)
- Zakat payments
How to Reduce Your Monthly PCB
Option 1: Update Your TP1 Form — Submit an updated TP1 form (Borang TP1) to your HR department declaring your additional reliefs. Common claims: spouse relief, children, life insurance, SSPN, parents' medical expenses.
Option 2: Apply for PCB Reduction (TP3) — If you have significant reliefs or irregular income, apply directly to LHDN using Form TP3. LHDN will issue a directive to your employer to reduce the monthly deduction.
Option 3: Claim Everything at Filing Time — Let standard PCB run throughout the year and claim all reliefs when filing your annual return. You'll get a refund, but your monthly cash flow will be lower than it needs to be.
PCB vs Annual Tax Filing
| PCB (Monthly) | Annual Filing | |
|---|---|---|
| When | Every month | Once a year |
| Calculated by | Your employer | You (via e-Filing) |
| Reliefs considered | Basic only (unless TP1 filed) | All eligible reliefs |
| Accuracy | Estimate | Exact |
| Result | Advance payment | Final tax payable |
What Happens If PCB Is Not Deducted?
If your employer fails to deduct PCB, they — not you — are liable for the unpaid amount. However, you are still responsible for filing your annual tax return and paying any tax due.
If you're self-employed or freelancing without PCB, you should make instalment payments (CP500) to avoid a large tax bill at year-end.
Key Takeaways
1. PCB is not extra tax — it's your income tax paid in advance every month.
2. If you claim all eligible reliefs at filing time, you'll likely get a refund.
3. Update your TP1 form to reduce monthly PCB and improve cash flow.
4. Always compare your annual tax estimate with PCB deducted to avoid surprises.
For exact PCB calculations, refer to LHDN's official PCB calculator.
This article is for informational purposes only. Refer to hasil.gov.my for official rates.