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Avoid LHDN's 300% Tax Penalty. How to Declare Income Tax (YA 2022)

BY Nisya Aziz

Updated 27 Mar 2023

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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.

What's covered in this article?

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. 

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 to log in to the website for the first time. It’s a bit leceh because the only way to get the PIN 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. 

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 access to the e-Filing system, the next thing to do is to choose the right form. Go to e-Form (which is under e-filing) and choose Income Tax Form BE (e-BE). Note that this is only for those without a business source of income with the assessment year 2020 (keep in mind that you’re filing for 2020 income tax in 2021). 

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 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 a balance or excess in income tax payment. This balance/excess amount includes 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.


Oh.. If you pay late, will you get a penalty?

You will be penalised for paying later than you should... depending on your own situation. For example, if you really have to pay the tax starting in 2021, you should pay it at the beginning of 2022, right, and not just realise it now (right!).

If you pay late after certain dates, you have to add an extra 10% later. The deadline depends on where the source of income comes from:
  • Apart from business (paying salary & commission!): April 30
  • Create your own business: June 30

If you still fail to pay the taxes and penalties imposed within 60 days, you will get an additional penalty of 5% on the outstanding amount.

If you think you can lari, admin advises you to think carefully, because LHDN can trace these taxpayers using data analysis and with the help of local and foreign agencies, you know. Don't look for problems lah.

What if not enough money? Can do instalments ah?

Good news, CAN.

LHDN's objective is to return national income from citizens and businesses that are entitled to pay income tax, not to impose fines because they cannot pay all at once. But there is a condition...

The reason... if you declare between November 3, 2022 and March 31, 2023, you have to pay the remaining amount that needs to be taxed no later than April 1, 2023. If you declare between April 30 to June 2023, you have to pay it no later than July 1. Hopefully, there is time to plan properly...

So, there you have it. Since you can do this online now (except for getting the PIN part), you shouldn't delay declaring your income tax any longer. “ But I don’t have a 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 (maybe not now during a pandemic).

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.

*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.

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About the Author

Nisya Aziz

A storyteller at Finology, who drinks coffee like its water, Nisya enjoy bringing valuable, educational and entertaining content to others. When not busy crafting content, you’ll find her in the boulder gym or on stage, performing theatre shows.


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