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Here’s How To Avoid Paying 300% Tax Penalty by LHDN

Updated 17 Dec 2018 – By Nisya Aziz

Most Malaysian taxpayers would’ve received an email or letter from Inland Revenue Board (LHDN) by now about its initiative called the Voluntary Declaration Special Program (PKPS). This is to encourage taxpayers to declare their income voluntarily at any LHDN offices from 3 November 2018 to 30 June 2019 (still got time, but don’t delay long long la).

To those who just started ‘adulting’, if you’re earning an annual employment income of RM34,000 or RM2,833. 33 per month (both after EPF deductions), you MUST declare your income and file your tax. Heads up - the process is a bit mafan, but rest assured that you’ll not create unnecessary issues in the future.

Have to meh? What happens if I don’t?

Short answer - sh** will happen. Long answer - If caught by the LHDN’s auditor, you’ll face a penalty ranging from 80% to 300% of the taxable amount. That’s a lot of money, people. For example, if your total taxable amount is just RM500, now you have to pay RM1,500 because of the 300% penalty. 

On top of that, there’ll be fines of RM1,000 to RM20,000 (if the case is severe) or imprisonment, or even worse - BOTH. This is based on the Income Tax Act of 1967, “Failure (without reasonable excuse) to furnish an Income Tax Return Form”. You could’ve spent those monies and freedom somewhere better like a vacation or an investment. 


That’s Mean That Means With PKPS I Don't Have To Pay Penalty, Is It?

This depends on your situation. If you’ve been earning the said amount for a while now (like 2 or 3 years or more) you’ll still get a penalty for lateness. Remember, that you are supposed to do it when your salary. However, the percentage of penalty is rather low - from 10% to 15% of the taxable amount. Do take note that PKPS have two different phase:
  • Phase 1: You’ll be charged 10% penalty if you declare your income from 3 November 2018 to 31 March 2019.
  • Phase 2: You’ll be charged 15% penalty if you declare your income from 1 April 2019 to 30 June 2019.
So, if you’re a taxpayer who has yet to register the income tax file or declare/update your current income, we urge you to take this opportunity to do it ASAP (or before 1 July 2019 if you have a busy life), so that you won’t kena large amount of penalty. And, if you think you can escape this, think again because LHDN can track taxpayers who fail to declare their income by using a data analysis with the help of various local and international agencies. BOOM.

Also, according to LHDN’s Director of the Communications Division and CEO, Syarein Abu Samah, the details shared won’t be questioned and your family members and/or business partners will be spared from being audited. How about that?


But, what if I don’t have enough money. LHDN accepts instalment payment ah?

Good news is YOU CAN. Malaysia Boleh was created for a reason okay. And since the goal is to collect unpaid income tax t, LHDN is giving you a leeway to do what’s right. But, it comes with a set timeline - don’t la procastinate pulak.

If you make your declaration between 3 November 2018 to 31 March 2019 (Phase 1), the balance of your taxable amount needs to be paid by 1 April 2019. Meanwhile, to those who make the declaration between 1 April to 30 June 2019, you need to pay your tax by 1 July 2019. 


Okay la, so how do I declare my income?

1. Register yourself as a taxpayer

You can do so online via LHDN website by clicking the ‘Online Registration Form’ link. Before submitting the registration, make sure that you key in the information needed correctly. Take note that you’ll need to upload a clear copy of your IC so that they can verify your identity. Once accepted, you’ll receive an application number for future reference. 

2. Register for an e-Filing system account 

To proceed, you’ll need a PIN number to login to the website for the first time. It’s a bit leceh because the only way to get the PIN number for your e-Filing is from any LHDN branch. Before this, you can do it online, but to avoid identity thief or something like that, they’ve changed the requirements.

One good thing about it is the process takes less than 3 minutes. Once you get to your nearest LHDN branch, head straight to the reception counter and inform the officer (or clerk?) that you want to get your e-Filing PIN number. 

You will need to provide your NRIC (DON'T forget to bring it or you’ll just be wasting your petrol money) and the officer-slash-clerk will print out your e-Filing PIN that looks just like this:


3. Choose the correct form

Now that you’ve gotten the access to the e-Filing system, the next thing to do is to choose the right form. Go to e-Form (which under e-filing) and choose Income Tax Form BE (e-BE). Note that this only those without a business source of income with the assessment year 2018 (keep in mind that you’re filing for 2018 income tax in 2019). 

4. Check if the details are correct

Your particulars will be automatically filled out in the columns. So you have to make sure that they are correct. Don’t forget to fill in your bank account details for income tax returns so that the government can bank in the money. 

Next, key in your income details in the relevant categories based on your EA form for this part. Your company will provide the EA form, so don’t kancheong. Other than that, if you have been working the past few years but didn’t declare your income, then you should fill in the section called ‘Income Of Preceding Years Not Declared’.

5. Claim those tax reliefs, rebates and exemptions

Since the cost of living is rising, you should take this advantage to reduce the amount of taxes you’d need to pay is through these three things – exemptions, reliefs and rebates. Things that you claim are medical and life insurance, books, EPF/SOCSO contribution,   fees and fitness equipment, just to name a few. So keep the receipts as the proof of purchase/spending for the items you’re claiming for up to 7 years.

READ: Claim As Much As Possible For Your Tax Refund!


 6. Check your final tax amount

Once you’re done, scroll down to the last section called ‘Summary’. The system will then help to calculate your taxes (this is great if you’re mathematically challenged). Here you get to know whether you have balance or excess in income tax payment. This balance/excess amount includes after the deduction of the Monthly Tax Deduction (MTD), also known as PCB.

7. Declare that sh** and voila!

The part that taxpayers are waiting for - to declare that all the information you provided is true. All you have to do is to give your electronic signature and send it off - SETTLE! Take note that you’re still able to make changes or double check the information given after the submission.

So, there you have it. Since you can do this online now (except for the getting the PIN part), you shouldn't delay declaring your income tax any longer. “ But I don’t have computer and internet, how?”, you said. Well, no worries. LHDN branches do provide computers with internet access so that you can get it done there. 

And, if you feel that you’re not sure or have some issues declaring your taxes, don’t hesitate to talk to the LHDN officer. They can help you out and come to a mutual agreement. Haaa...whatchu waiting for? Let’s be a responsible citizen ye kawan-kawan.
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