Before the up coming Goods Sales Tax (GST) take effect on 1st April 2015, let’s focus on personal income tax. I think there is a common question for fresh new graduate after getting into their first job: Shall I pay income tax?
Let’s start from the very beginning, Are You Taxable?
According to Inland Revenue Board Of Malaysia (aka Lembaga Hasil Dalam Negeri Malaysia), with effect year 2013 an individual who earns an annual employment income of RM30,667 (after EPF deduction) or RM 34457.30 (before EPF deduction) has to REGISTER a tax file.
This mean if your monthly income equal or not less than RM 2,871.45 (before EPF deduction) or RM 2,555.58 (after EPF deduction) for continuous 12 months in a calendar year, you must register a tax file. For your information, current EPF contribution rate is 11% for employee and 13% for employer.
Register A Tax File = Pay Income Tax?
No. That’s not always true, it largely depends on your income after deduct the tax relief, donation or gifts that can be exempted, and tax rebate, your chargeable income will be determined whether you should pay tax or how much you should pay.
For example, your annual income in year 2013 was RM 31,000 after EPF deduction, after deduction of tax relief, your chargeable income is RM 4,000, and the rate of income tax for RM 4,000 is 0%, then you don’t have to pay income tax for the income of year 2013.
We will talk more about income tax in the next few articles and giving you more examples to help you in better understanding on our income tax matters.
For more details information or expert opinion, please contact Inland Revenue Board Of Malaysia at 1-800-88-5436 (LHDN) or walk-in to any nearest branches.