PCB / MTD (Monthly Tax Deduction) for Malaysian employers
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If you employ staff in Malaysia, you deduct income tax from their pay each month and send it to LHDN. This is Potongan Cukai Bulanan (PCB), also called Monthly Tax Deduction (MTD). It is one of the payroll duties small employers most often get wrong — by miscalculating, missing the deadline, or forgetting the return.
The short version
- PCB and MTD are two names for the same thing: income tax you withhold from an employee’s monthly pay and remit to LHDN on their behalf.
- Three duties: deduct the right amount using LHDN’s prescribed method, remit it on time, and report it on the CP39 return.
- Submit and pay through e-PCB Plus on MyTax (mytax.hasil.gov.my). The deadline is the 15th of the following month — the same date as EPF, SOCSO and EIS.
- PCB is calculated on chargeable income after reliefs, not a flat percentage of gross pay. For YA 2026 the individual relief is RM9,000 and employee EPF is allowed up to RM4,000 a year (as at July 2026, source: LHDN).
- A non-resident employee’s MTD is a flat 30% with no reliefs, and where the calculated MTD for a month is under RM10, no deduction is made.
- First thing to do: run one employee through our free PCB calculator, then confirm the current year’s parameters with LHDN.
Want the number instead of the theory? Try the free PCB calculator.
What is PCB / MTD?
PCB (Potongan Cukai Bulanan) and MTD (Monthly Tax Deduction) are two names for one thing. The employer withholds income tax from an employee’s monthly pay and remits it to LHDN on the employee’s behalf, spreading the annual tax across the year instead of one large bill at filing.
For many employees, if their income is straightforward, PCB deducted over the year can closely match their final tax — in some cases MTD can even serve as their final tax under the rules LHDN sets.
What are my duties as an employer?
Three of them: deduct, remit, report.
- Deduct. For each pay period, calculate the PCB on the employee’s remuneration using LHDN’s prescribed method (the computerised calculation method is the common route) and withhold it from their pay.
- Remit. Pay the total PCB you withheld to LHDN by the statutory monthly deadline. Late payment can attract penalties, so the date matters as much as the amount.
- Report. Submit the CP39, the prescribed monthly return that lists each employee and the PCB deducted. Many employers submit it electronically through LHDN’s channels.
- You also reflect the year’s figures in the employee’s annual statement of remuneration (the EA form / C.P.8A) so they can file their own return.
What affects the PCB amount?
PCB is calculated on chargeable income after deductions and reliefs, not as a flat percentage of gross pay. If you want the number for one employee rather than the method, our free PCB calculator applies these reliefs and the EPF deduction for you.
- Statutory contributions. An employee’s mandatory EPF (and certain other approved fund) contributions are deductible up to the limits set by LHDN, which lowers chargeable income and therefore PCB.
- The RM4,000 EPF limit is a year-to-date cap, not RM333 a month. LHDN’s computerised MTD specification §13(v) restricts the total EPF allowed across the year to RM4,000, so the monthly formula throttles what it still allows once the running total reaches the cap. Treating it as a flat monthly figure understates the tax.
- Personal reliefs and rebates. The standard individual relief, spouse and child reliefs and similar items reduce the tax base.
- TP1 declarations. Employees can declare additional reliefs to their employer using the TP1 form (for example, certain lifestyle, medical or education expenses) so their monthly PCB reflects them, rather than waiting for a refund at filing.
- TP3 — prior employment in the same year. An employee who joins mid-year may have had income and PCB with a previous employer; the TP3 form captures that so the new employer can calculate PCB correctly for the rest of the year.
- Other variables. Tax residency status, marital and dependant details, bonuses and other additional remuneration (which can be taxed differently from regular monthly pay), and benefits-in-kind.
- Relief amounts and calculation parameters can change from year to year, so always run the current year’s figures rather than reusing last year’s.
Two rules worth knowing
A non-resident employee’s MTD is a flat 30% of remuneration, with no reliefs (as at July 2026, source: LHDN). And where the calculated MTD for a month comes to less than RM10, no deduction is made.
Both rules come from LHDN’s computerised calculation specification — verify them there before relying on this summary.
| Relief | Annual amount |
|---|---|
| Individual (self) | RM9,000 |
| Spouse (no income, assessed together) | RM4,000 |
| Each qualifying child | RM2,000 |
| Disabled individual (additional) | RM7,000 |
| Disabled spouse (additional) | RM6,000 |
| Employee EPF contributions allowed in the MTD formula | Capped at RM4,000 per year |
Amounts follow LHDN’s computerised MTD calculation parameters for YA 2026. Relief amounts change with annual budgets — the disabled-person reliefs, for example, rose in YA 2025 — so confirm the current year’s figures with LHDN before relying on them.
What is the CP39 return?
CP39 is the statement of monthly tax deductions an employer submits to LHDN, listing employees and the PCB withheld for the period. It is the link between the money you remit and the employees it belongs to, so its totals should reconcile with what you actually paid over.
Getting CP39 right matters because it feeds each employee’s tax record. Errors or omissions can create mismatches that surface later when employees file their own returns. Keeping accurate monthly records makes both the CP39 and the year-end EA form straightforward.
How to submit and pay PCB (CP39)
PCB is submitted and paid through e-PCB Plus on MyTax (mytax.hasil.gov.my) — the single PCB service that consolidated the old e-PCB, e-Data PCB and e-CP39 portals, which have been deactivated.
- Upload the CP39 text file your payroll produces for the salary month, or key the figures in by hand, then confirm the totals before submitting.
- First time? Expect a short setup: register your employer role in MyTax, appoint a PCB representative, and load your employer and employee details — name as per identity document, identity card or passport number, and tax identification number (TIN) — so the upload matches records LHDN already holds.
- Pay after submitting: by FPX directly from the portal, by interbank GIRO at a bank counter or through internet banking using your PCB/CP39 account number, or in cash at a CIMB counter.
- The deadline is the 15th of the following month — the same date as your EPF, SOCSO and EIS remittances, which is why most employers do all four in one sitting.
- As at August 2026, source: LHDN (mytax.hasil.gov.my); portals and deadlines change, so confirm the current position with LHDN before you file.
How Taokeh payroll automates PCB / MTD
Taokeh, the Malaysian SME accounting software by Enya Venture, calculates PCB for each employee using LHDN’s computerised method, taking into account EPF contributions, declared reliefs, residency status and additional remuneration — so you are not maintaining a spreadsheet of tax tables by hand.
- The calculation has been through LHDN’s MTD software verification. The approval letter is ref LHDNM.01/45/274/3-2 (2026-256), dated 13 August 2026, signed by the Director of the System Development Division.
- Taokeh (Enya Venture) is entry 256 on LHDN’s public list of complying providers, effective 13 August 2026 — what that listing does and does not mean, and the payroll software page shows the letter itself.
- It supports the inputs that change the number, including TP1 relief declarations and TP3 prior-employment details.
- It produces the CP39 export for your monthly submission.
- At year end it generates the EA form (C.P.8A) for each employee from the same payroll data.
- Because payroll sits on the same ledger as the rest of your accounting, the salary, statutory contributions and PCB are recorded consistently — your books and your statutory submissions come from one source rather than being reconciled after the fact.
Frequently asked questions
Is PCB the same as MTD?
Yes. PCB (Potongan Cukai Bulanan) is the Malay term and MTD (Monthly Tax Deduction) is the English term for the same monthly income-tax withholding by employers.
What is the CP39?
CP39 is the monthly return an employer submits to LHDN listing employees and the PCB amounts deducted. Its totals should reconcile with the PCB you remitted for the period.
How do I submit and pay PCB?
Through e-PCB Plus on MyTax (mytax.hasil.gov.my), which replaced e-PCB, e-Data PCB and e-CP39. Upload the CP39 file or key the figures in, then pay by FPX from the portal, by interbank GIRO through your bank using your PCB/CP39 account number, or in cash at a CIMB counter. The deadline is the 15th of the following month (as at August 2026, source: LHDN).
How do reliefs like TP1 and TP3 affect PCB?
TP1 lets an employee declare additional allowable reliefs (such as certain lifestyle, medical or education expenses) so their monthly PCB reflects them. TP3 captures income and PCB from prior employment in the same year so a new employer calculates the remaining PCB correctly.
Does EPF reduce PCB?
Yes. An employee’s mandatory EPF contributions are deductible in the MTD formula up to RM4,000 a year (as at July 2026, source: LHDN). That lowers chargeable income and therefore the PCB. Confirm the current cap for the year you are calculating.
Is the RM4,000 EPF cap monthly or annual?
Annual, and measured year to date. LHDN’s computerised MTD specification §13(v) restricts the total employee EPF allowed in the formula to RM4,000 for the year, so each month’s calculation allows less once the running total approaches the cap. Splitting it into roughly RM333 a month is not the prescribed method and understates the tax (as at August 2026, source: LHDN).
How much is the individual relief in the PCB calculation?
For YA 2026 the individual relief is RM9,000 a year (as at July 2026, source: LHDN). A non-working spouse adds RM4,000 and each qualifying child RM2,000. These amounts change with annual budgets, so confirm the current year’s figures with LHDN.
Updated August 2026
This guide is general information for Malaysian SMEs, not tax, legal or accounting advice. Always confirm current rules and figures with the relevant authority or your own adviser.
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- LHDN-approved payroll software in Malaysia: what the list actually means
- LHDN e-Invoice (MyInvois) for Malaysian SMEs: a plain-English guide
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