Monthly Tax Deduction for additional remuneration based on Computerised Calculation shall be subject to the followings: 

1. Calculations is limited to two decimal points only and omit the subsequent figures;
Example : 123.4567 = 123.45
 
 2.  The amount of Monthly Tax Deduction to be rounded up to the nearest five cents as follows:
 (i) one, two, three and four cents to be rounded up to five cents; and 1, 2, 3, 4 – rounding to the 5 cents Example : 287.02 ≈ 287.05
 
 (ii) six, seven, eight and nine cents  to be rounded up to ten cents; 6, 7, 8, 9 – rounding to the 10 cents Example : 152.06 ≈ 152.10
 
3. If the amount of Monthly Tax Deduction or Monthly Tax Deduction before deduction for zakat is less than ten ringgit, the employer is not required to make the Monthly Tax Deduction; and
 
4. If the amount of Monthly Tax Deduction after deduction for zakat is less than ten ringgit, the employer is required to make the Monthly Tax Deduction.

5. Zakat shall be treated as follows:
 a) Employees receive only remuneration (without additional remuneration). 

6. MTD for computerised calculation method must be paid for the actual amount (including the decimal point amount).
 
 
7. In the situation where employees do not receive any normal remuneration in the current month but only additional remuneration, then value of Y1 is equal to 0.
 
 
8. If additional remuneration paid before the monthly remuneration, value of Y1 shall refer to the monthly remuneration which will be paid for that month.  
 
 
9. MTD is to be deducted from the employee’s taxable remuneration only. All the tax exemption on allowances, benefit-in-kind and perquisites shall be excluded from the remuneration for MTD purposes. Any amount exceed the restricted amount shall be taxable. Please refer to Explanatory Notes E Form  for references.
 
All the tax exemption on allowances, benefit-in-kind and perquisites shall reported in the EA Form, section G – TOTAL TAX EXEMPT ALLOWANCES / PERQUISITES / GIFTS / BENEFITS.
 
Type of benefit-in-kind and perquisites that exempt from tax are as follows:  

Example :  
Normal remuneration   : RM5,000 per month      
Car allowance               : RM   800 per month  
Meal allowance             : RM   300 per month (Exempted)    
Childcare allowance     : RM   300 per month (Exempted – limit to RM2,400 per year) Total                                : RM6,400 per month  
 
To determine MTD amount, taxable income as follow:    
Normal remuneration           : RM5,000 per month      
Car allowance                       : RM   800 per month        
Total taxable remuneration  : RM5,800 per month
 
10. Employee who newly joined the company during the year shall submit TP3 Form (Exhibit 1) to his new employer to notify information relating to his employment with previous employer in the current year.
 
The amounts related to the previous employment in the previous employer in the current year are used only for the purpose of MTD calculation. These amounts shall not appear in the pay slip and EA Form.
 
The information amount from the TP3 Form shall be treated in the formula as variable (Y–K*), X, Z and ∑LP. 

Please refer below link of Public Ruling for detail explanation of Perquisites respectively:
http://lampiran1.hasil.gov.my/pdf/pdfam/PR2_2013.pdf
 
11. Employee who has benefits-in-kind (BIK) and value of living accommodation (VOLA) as part of his monthly remuneration shall deduct PCB as per normal remuneration. Therefore, the TP2 form (Exhibit 2) is not applicable for 2015 onward.
 
Amount of BIK/VOLA shall be treated as part of Y1 in the MTD calculation during the current year only. It shall not carry forward to the following year.
 
Amount of BIK/VOLA are used only for the purpose of MTD calculation. These amounts shall not appear in the pay slip and EA Form as gross salary/remuneration.
 
There are 2 methods in providing fields to key into the system:
a. Employer input monthly amount and system treated as Y1 in the MTD formula.
 
b. Employer input the total amount of each BIK/VOLA and system calculate the monthly amount that system treated as Y1 in the MTD formula. The method of calculation to obtain a monthly amount is as follow: 

Example :  
 
Value of car in a year                                                                      : RM25,000
Month/year of deduction agreed by the employer                      : April 2012
Remaining working month in a year including  current month    : 9 months
 
Monthly amount          : RM25,000 / 9
                                      : RM2,777.77 ≈ RM2,777.00
 

  • The value of BIK/VOLA for a year is the actual benefit received by the employee.

Please refer below link of Public Ruling for detail explanation of BIK and VOLA respectively:
http://lampiran2.hasil.gov.my/pdf/pdfam/PR3_2013.pdf


12. EPF for the purpose of MTD calculation are as follows:
 
a. If allowances categorized as the remuneration subject to EPF but not subject to tax, all amount of EPF shall be treated as K1.
Salary                                         : RM2,400.00
Child care allowance                : RM300.00 (receives every month – remuneration                                                                                   category)
EPF deducted from the salary  : RM297.00
K1 (as per EPF deduction)   : RM297.00
 
b. If allowances categorized as the additional remuneration subject to EPF but not subject to tax, difference of total EPF with the EPF remuneration shall be treated as Kt.
 
Salary                                                  : RM2,400.00
Meal allowance                                  : RM450.00 (one off payment – additional                                                                                                  remuneration category)
EPF deducted from the salary          : RM315.00
K1  (EPF for remuneration)                 : RM264.00
Kt (difference from total and normal): RM315 –RM264          
                                                             : RM51.00
 
c. If there is an additional remuneration
 
Salary                                                  : RM2,400.00
Bonus                                                  : RM3,600.00
EPF deducted from the salary           : RM660.00
K1 (EPF for remuneration)                  : RM264.00
Kt (difference from total and normal): RM660 –RM264        
                                                            : RM396.00
 
13. All allowable deductions are limited up to the maximum amount under the Income Tax Act 1967. The amount of allowable deduction shall not appear in the pay slip and EA Form.
 
a. Compulsory deductions
 There are six (6) type of compulsory deductions that affect in the formula as follows:  

b. Optional deductions
 
Employee can claim deductions and rebates in the relevant month subject to approval by employer by submitting TP1 Form (Exhibit 3) to the employer.
 
In the formula, all optional deductions shall be treated as ∑LP for the cummulative deductions and LP1 for the current month deductions. System must show cumulative and current month deduction amount for the purpose of audit.  

List of deductions must be provided in the system as follows: 

14. Rebate on Zakat
 
There are two type of zakat as follows:
 a. Zakat that deducted from the remuneration (payslip) Amount of zakat should appear in the payslip and EA Form.
 
b. Zakat claimed through TP1 form

  • Amount of zakat should not appear in the payslip and EA Form due to employee himself paid directly to Pusat Zakat.

  • It is treated as zakat for current month in the month claimed by the employee. 

Source:
http://lampiran1.hasil.gov.my/pdf/pdfam/SpesifikasiKaedahPengiraanBerkomputerPCB2017.pdf

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