LHDN has now updated their PCB Calculations based on the 2023 Budget. The PCB Calculations from June 2023 will be based on the new calculations.
Amendments for computerised calculation method of Monthly Tax Deduction (MTD) 2023 are as follows.
REVIEW OF INCOME TAX RATES AND INCOME TAX STRUCTURE
Income Tax for Resident Individual
Presently, the income tax for resident individual taxpayer is calculated based on scale rates ranging from 0% to 30% with the maximum rate of 30% being applicable to the chargeable income band RM2,000,000 and above. Generally the Tax Rate for Taxable income below 100,000 has decreased and the Tax Rate above 100,000 has increased. PCB for Taxable Income below 35,000 remain the same.
Despite increase in rates for 100,000 and above, the PCB is still lower than before. PCB rates only increase at around income of 350,000.
Please go to the end of the page to see sample calculation for May and June showing the real changes to PCB.
It is proposed that tax rates for tax resident individuals for the following chargeable income bands will be reduced by two percents:
- RM35,001 to RM50,000 (-2%)
- RM50,001 to RM70,000 (-2%)
- RM70,001 to RM100,000 (-2%)
It is proposed that tax rates for tax resident individuals for the following chargeable income bands will be increased by between 0.5 to two percents:
- RM100,001 to RM250,000 (1%)
- RM250,001 to RM400,000 (0.5%)
- RM400,001 to RM600,000 (1%)
- RM600,001 to RM1,000,000 (2%)
PCB Calculation Table
|P (RM)||M (RM)||R (%)||B Category 1 & 3 (RM)||B Category 2 (RM)|
|5,001 – 20,000||5,000||1||– 400||– 800|
|20,001 – 35,000||20,000||3||–250||–650|
|35,001 – 50,000||35,000||6||600||600|
|50,001 – 70,000||50,000||11||1,500||1,500|
|70,001 – 100,000||70,000||19||3,700||3,700|
|100,001 – 400,000||100,000||25||9,400||9,400|
|400,001 – 600,000||400,000||26||84,400||84,400|
|600,001 – 2,000,000||600,000||28||136,400||136,400|
Real Life example showing changes based on new PCB Calculations
|Gross Pay||Annual Income|| Net PCB|
| Net PCB|
One surprising result is that PCB only increases for income above 350,000. PCB for income above 100,000 is still less.
This is because PCB calculations are based on cumulative tax. The total tax below 100,000 has already decreased substantially. This decrease in Tax is more than the increase in tax for income above 100,000. It is only at the 350,000 mark that the accumulated tax makes up for the reduced tax below 100,000.
For a better understanding of PCB calculations, please refer to our article “A Complete Guide to LHDN PCB Calculations“.