“Why is My Salary Lower Than I thought it’d be?”
If you’ve seen a line labeled PCB Deduction on your pay slip and didn’t know what it meant — this guide will help you out.
PCB stands for Potongan Cukai Bulanan, which is Malaysia’s Monthly Tax Deduction system. The LHDN (Inland Revenue Board of Malaysia) oversees PCB. It’s not a separate tax — it has the purpose to serve as an advance payment of your annual income tax.
To put it another way: PCB splits your tax bill into smaller monthly payments instead of one big payment at the end of the year.
What’s the Meaning of PCB Deduction in Malaysia?
PCB = Monthly Tax Deduction
- PCB is NOT an extra tax. It serves as a down payment for your yearly income tax.
- Your boss takes PCB out of your paycheck each month and sends it straight to LHDN.
- When the year ends, you still have to submit your income tax return (Form BE):
- If you’ve overpaid, you’ll get a refund.
- If you’ve underpaid, you’ll need to top up.
In Malaysia, PCB (Potongan Cukai Bulanan) means taking tax out of worker paychecks every month. This acts as an early payment to LHDN for the yearly income tax.
Who Needs to Pay PCB?
Workers who make over RM34,000 (after EPF deduction) need to pay PCB. This covers:
- Full-time and contract workers
- Employees getting allowances, commissions, or bonuses
- Anyone with income above the tax threshold
PCB still applies to short-term contract workers once their income goes above the threshold.
How Do They Calculate PCB?
PCB deductions aren’t simple percentages — they rely on several elements.
|
Factor |
How It Affects PCB |
|
Gross Salary |
Includes base pay, allowances, bonuses |
|
EPF Contribution |
Reduces taxable income |
|
Marital Status |
Spouse’s employment affects rates |
|
Number of Children |
More dependents = higher reliefs |
|
Tax Reliefs |
Lifestyle, insurance, education, parents, etc. |
Example (Single employee):
- Salary: RM5,000/month
- EPF: RM550 (employee share)
- Net taxable: RM4,450
- Approx. PCB: RM100–RM200/month depending on other benefits
Remember: Exact deductions follow LHDN’s PCB Table/Calculator to calculate for 2025.
PCB and Bonuses: Do They Get Deducted Too?
Yes. Bonuses have to be part of PCB calculations.
- Here’s an example:
Monthly pay: RM4,000
Bonus: RM6,000
Total income that month = RM10,000
PCB is calculated out on RM10,000 (not just RM4,000)
A lot of employers don’t remember this, which can lead employees to face unexpected tax bills down the road.
What Employers Need to Do for PCB in Malaysia
The law requires employers to:
1. Calculate PCB right each month
2. Deduct PCB from workers’ pay
3. Send PCB to LHDN by the 15th of the next month
NOTE: If you don’t follow these rules, you might face:
- Penalties
- Checks
- Court action against your business
Can Workers Lower Their PCB?
Yes. You can change your tax info with LHDN to make sure your PCB fits your real life.
Ways to lower PCB:
- Tell them about your partner’s job status
- List how many kids/dependents you have
- Turn in allowed deductions (insurance, school, lifestyle, parent care, and more)
If you don’t declare, LHDN assumes you have no dependents and no reliefs — this might lead you to pay more than necessary.
Common PCB Mistakes Employers Make
|
Mistake |
Impact |
|
Not deducting PCB from contract staff |
Non-compliance, penalties |
|
Miscalculating variable income (bonuses/overtime) |
Under or overpaid taxes |
|
Missing the 15th deadline |
Fines from LHDN |
|
Relying on manual Excel |
High error risk, no audit trail |
|
Forgetting PCB on bonuses |
Employees face surprise bills |
Pro Tip: Steer clear of these slip-ups by using automated payroll software.
How Payroll Software Helps With PCB
Info-Tech’s HRMS & Payroll Software makes PCB compliance a breeze:
- Calculated out PCB using LHDN’s newest calculation formulas
- Factors in bonuses and allowances for monthly take-outs
- Sends in PCB and e-CP39 online
- Creates reports ready for auditing
- Syncs payroll, EPF, SOCSO, and PCB in one place
No Excel files. No late hand-ins. No mistakes.
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To Sum Up
PCB might seem like “just another number on your pay stub,” but it forms the core of Malaysia’s Monthly Tax Deduction system. For workers, this means paying taxes bit by bit. For bosses, it means following LHDN rules to the letter.
With proper understanding — and the right software — PCB becomes easy. Info-Tech’s cloud-based payroll software eliminates uncertainty from tax deductions keeping both employees and employers on the right side of the law.
Frequently Asked Questions:
What is PCB in Malaysia?
PCB (Potongan Cukai Bulanan) is Malaysia’s monthly tax deduction system. Employers take out part of an employee’s salary each month as advance income tax to LHDN.
Do bonuses get PCB deductions?
Yes. PCB calculations for the month include bonuses, allowances, and commissions when they’re paid.
When must employers submit PCB to LHDN?
Employers need to submit PCB deductions on the 15th of each month.
Does PCB mean I don’t need to file income tax?
No. PCB serves as an advance payment. You still have an obligation to file Form BE yearly to balance your actual tax liability.
Can employees lower PCB?
Yes. Employees can decrease over-deductions by declaring dependents, spouse income status, and personal reliefs through LHDN’s e-PCB or e-CP39 portal. Yes. Employees can decrease over-deductions by declaring dependents, spouse income status, and personal reliefs through LHDN’s e-PCB or e-CP39 portal.