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Filing Income Tax in Malaysia: The 101 Guide

Another sign of adulthood that no one’s ready for is no doubt paying taxes. In Malaysia, filing for income tax is compulsory by law. The amount of tax that you need to pay varies depending on your annual chargeable income. But how do you know whether you are eligible enough to file for income tax?

Am I taxable?

Let’s take a look at your employment income. If you are earning more than RM34,000 per year which equivalent to RM 2833.33 monthly after EPF deduction, then you can consider yourself taxable. That’s the figure given by Inland Revenue Board (IRB) of Malaysia or Lembaga Hasil Dalam Negeri (LHDN). Bear in mind that you must declare your income if your employment income per year exceeds the above figure. What could happen if you don’t declare yourself as a taxpayer? According to the Income Tax Act (ITA) 1967, a penalty will be given to those who are late or trying to avoid taxes. There’s a chance you might be restricted from going out of the country too.

Perhaps this your first time figuring this thing out. Take it easy. You’re probably not alone. Check out this handy guide on how you can file for income tax in Malaysia.

So how and where do I start?

What comes to your mind when it comes to tax filing? Complicated procedures? Going back and forth to the LHDN office? Nah. Have you heard of ezHASIL before? What is ezHASIL? ezHASIL is an e-Filing system introduced by our government to ease the process of filing income tax. What’s great about this system is, it does not only saves your time but also provides you an additional 2 weeks extension of the deadline. Malaysians can start filing their income tax on March 1 every year. The deadline is usually set on April 30 but if you use the e-filing, you will have an extra 14 days to file your income tax.

UPDATE: LHDN has extended the income tax filing deadline by 2 months from the original date to facilitate the disruption by the national movement control order as announced by the Government on 16th March 2020.

1. Taxpayers registration

If you’re earning more than RM34,000 annually, take the initiative by registering yourself as a taxpayer to LHDN. You can complete the registration through e-Daftar on LHDN’s official website. Then, scan and upload a copy of your identification card (IC) for verification purposes. But what if you don’t have access to the internet? Worry not as LHDN’s office does provide registration service for new taxpayers too. However, the documents required slightly differs from online registration. Bring a copy of these documents when registering at a LHDN branch:

  • Mykad/ police IC/ army IC/ international passport
  • Payslip/ latest salary statement (EA/EC form)
  • Marriage certificate (if applicable)

Note that LHDN will take at least three working days to process and approve your application. Once your application is approved, you will need to visit the LHDN office to get your PIN number. Don’t lose it! You will need the PIN number for first time registration on e-Filing. As for the income tax number, you may call the LHDN hotline at 03-8913 3800 and acquire it yourself.

2. e-Filing registration

So you’ve got the PIN number? Good! Now let’s complete the first time registration for e-Filing. You can first register and create an account on ezHASIL. This is where the PIN number plays its role. Once you’ve successfully completed the first time log in procedures, click on e-Form or e-Borang to begin your tax filing. A list of Income Tax Return Form (ITRF) will be displayed. Choose the one that you think you fall under.

3. Check your details

Have you clicked on the right form? Excellent! You will now see your personal details have been automatically filled out. Scrutinize the details displayed and apply the changes where needed. Make sure the form shows the correct and latest information.

4. Fill in the income details

Now it’s time to fill in the income details. You can refer to your payslip or latest salary statement to complete this section. Don’t forget to fill in your bank account details too if you want the government to directly transfer the money of your income tax return. Do not worry as these details are pretty confidential. LHDN has assured that the bank account details of taxpayers will be kept safe and secured from any other parties.

5. Fill in the tax reliefs, tax rebates and tax exemption

The next section is where you need to key in your tax reliefs, rebates and exemptions. This is where you can reduce the amount of taxes that need to be paid. The fewer the chargeable tax, the more money you could get through the income tax refund. To maximise your income tax return, make sure you fully understand what tax reliefs, rebates and exemptions are, as they all serve different functions. Then, choose the one that is applicable to you. Remember to retain the proof of purchase neatly up to seven years for the items that you’re going to claim for.

6. Check total taxes

Previously, you will need to manually calculate your chargeable income and the amount of tax you need to pay, but thanks to ezHASIL, your total tax amount is now automatically calculated. After you’ve done keying in all the details, this section will let you know the balance due or if there’s any excess payment made. If you are required to pay any taxes, you can pay it through online banking, ATM, credit card or over the counter. Choose the option that you find most convenient. If there’s any excess paid, LHDN will refund the amount to your bank account within 30 working days.

It’s good that we now do not need to go through the traditional method of printing out the income tax form and fill it in manually as ezHASIL has made it super easy and convenient for us. Have you filed for your income tax yet? If you’ve not, get started soon!

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