New PCB System ?

The Star newspaper published the following article on 10 July 2009.

No other information is available after the publication. A check in the LHDN’s website also does not show any new PCB system or table. Borang TP1 has been in use since January 2009.
It does not look like there is a ‘new’ tax deduction system from July. This announcement is confusing employees and employers and should be ignored.

Published: Friday July 10, 2009 MYT 9:07:00 PM
New tax deduction system from July

PORT DICKSON: A new schedular tax deduction system from this month will eliminate the need for employees to pay an additional lump sum at the year-end to make up for the shortfall in monthly deductions.
Inland Revenue Board (IRB) chief executive officer Datuk Hasmah Adullah said that under the current system implemented in 2004, the board had on many occasions taken a big cut of the individual’s bonus to make up for the shortfall.
“We had cases where an employee’s entire bonus would go to the IRB (to make up for the shortfall). We do not want to do this any more as it is unfair to the taxpayer.
“It is better for us to make higher deductions every month. This is a better arrangement,” she said, adding that under new system, the taxpayer would have paid up almost all his dues by the end of the year.
She added that the new system would also allow for employees to submit their claims for rebates every month, along with a range of new reliefs.
Previously, the taxpayer was allowed to claim relief for himself, his spouse, their children, his Employees Provident Fund and insurance contributions, and zakat payment (if any), and claim other reliefs only when filing his returns at the end of the assessment year.
Under the new system, Hasmah said an employee can submit claims for rebates such as parents’ medical bills, purchase of a computer, tertiary education fees, medical check-ups, and book and sports equipment purchases to his employer every month using the PCB/TP1 form.
“When this is done, the tax to be paid for that particular month will be reduced automatically. This would practically be a real-time tax payment system.
“We want the taxpayer to benefit straightaway rather then wait till the end of the year,” she said.
She said under the new system, the employee could make monthly claims for 17 other reliefs announced in Budget 2009.
The employee, she added, would not have to submit receipts for the claims to the employer.
Among the new reliefs announced are for travelling allowance, petrol claims, parking fees, food allowance, caretaker fee, maternity and traditional medicine treatment (ayurvedic, acupuncture, etc) and subscription to broadband services.
She said taxpayers could submit their claims for rebates monthly, quarterly or twice a year.
Hasmah said employers who needed assistance on the workings of the new structure could enter the board’s website at and look for the schedular tax deduction (PCB) calculator icon.


  1. For individual who own business like sole-prop or partnership, is the bi-monthly instalments plan compulsory? If he has received the CP500, can the individual not take up the instalment plan by making a lump sum payment at the date when he submit his income tax return? Does the ITA allows? Thanks.

  2. All IRB's directives to pay tax by instalments have to be complied with. There will be penalties even if you pay late. If the IRB has issued you the instalment plan, you cannot unilaterally ignore it.

  3. If the TP1 is submitted in the middle of the year, will tax computation consider the previous month's tax and recalculate accordingly?

  4. Yes, once TP1 is submitted, the PCB calculation will take into consideration the amount of income and PCB not only for the previous months but also extimates for the coming months. You can use the PCB calculator available in the IRB's website.