How to Pay PCB For Employees: A Guide For Employers

Potongan Cukai Bulanan (PCB), or Monthly Tax Deduction (MTD) ensures employees pay income tax in manageable monthly amounts, and when done correctly, it prevents penalties for the company while giving employees peace of mind.

This guide explains what PCB is, how to calculate it, the payment methods, and best practices every HR professional should know.

What is PCB in Malaysia?

PCB, or Potongan Cukai Bulanan, is the system where employers deduct a portion of an employee’s monthly salary and remit it to LHDN as advance income tax.

The main purposes of PCB are:

Spread out income tax payments over 12 months instead of paying in one lump sum at the end of the year.
Reduce the burden on employees and ensure the government receives consistent revenue.
Act as a prepayment. After annual tax filing, employees may either get a refund (if they overpaid) or pay the balance (if underpaid).

Who is responsible for PCB?

Employers must calculate, deduct, and remit PCB every month.
Employees do not directly pay PCB, but they must still file their annual tax return to reconcile final tax liability.

Deadlines for PCB Payment

PCB must be submitted by the 15th of the following month. This applies every month, regardless of weekends or public holidays (if the deadline falls on a holiday, payment must be made on the next working day).

Penalties for late payment:

LHDN may impose fines, late payment charges, or legal action.
Penalties can be 10% or more of the outstanding PCB, which can add up quickly.

Employer Responsibilities in PCB

Employers must follow strict rules to stay compliant:

Register with LHDN as an employer

Employers need an E number before they can remit PCB. Registration can be done through the MyTax portal.

Deduct PCB correctly from employee salaries

The deduction is based on salary, EPF/SOCSO contributions, dependents, and reliefs. Employers must update deductions if employees provide new information (e.g., marriage, children, additional reliefs).

Submit the PCB on time

Ensure monthly submissions before the 15th and always keep proof of payment (receipts, online confirmation).

File annual reports

EA Form: to be given to employees by the last day of February.
Form E & CP8D: submitted by employers to LHDN by 31 March (manual) or 30 April (online).

How to Calculate PCB for Employees

PCB is not a fixed amount. It varies depending on several factors:

Employee’s monthly income (basic salary, allowances, bonuses).
EPF/SOCSO contributions made.
Number of dependents or children (as declared in Form TP1).
Other tax reliefs or zakat payments.

Ways to Calculate PCB

PCB Table (Jadual PCB)
LHDN PCB Calculator (e-PCB)
Payroll software

Example:

An employee earning RM4,000/month with EPF deductions and 2 children will have a different PCB compared to a single employee earning the same salary. That’s why employers must always use the correct method.

How to Submit PCB

Submission is done through LHDN’s online services. Employers can choose the most suitable option:

e-CP39: For manual entry of employee details. Suitable for small businesses.
e-PCB: For regular submissions with record keeping.
e-Data PCB: For larger companies using payroll software, where data is uploaded in bulk.

Steps to submit:

Log in to the MyTax portal (ezHasil).
Select e-CP39 / e-PCB / e-Data PCB.
Fill in or upload employee PCB details.
Verify and confirm submission.
Keep a copy of the CP39 submission form for your records.

How to Pay PCB for Employees

Employers can choose from several payment methods:

1. Online Banking FPX (via MyTax)

Log in to MyTax and select PCB payment.
Choose FPX and your bank.
Supported banks: Maybank, CIMB, RHB, Public Bank, Hong Leong, AmBank, Bank Islam.
Confirm the transaction and save the receipt.

2. ByrHASiL Portal

Go to byrhasil.hasil.gov.my.
Enter employer details and payment amount.
Pay via FPX, credit card, or debit card.

3. Banks and Agents

Pay over the counter at appointed banks or Pos Malaysia.
CIMB also offers cheque deposit kiosks.

4. Auto Deduction (Payroll Software)

Integrated payroll systems can auto-deduct PCB and upload data directly to the bank or LHDN.
Recommended for medium to large companies to reduce errors.

Filing & Reporting Obligations

PCB also comes with annual reporting duties that employers must complete to stay compliant with LHDN. These reports ensure both the company and employees have accurate records of income and tax deductions.

EA Form (Employee Statement of Remuneration)

Employers must prepare and issue the EA Form to each employee by the last day of February every year. The form summarises an employee’s total annual salary, allowances, benefits-in-kind, EPF contributions, and PCB deductions. Employees need the EA Form to file their annual tax return.

Example: For income earned in 2024, the EA Form must be given to employees by 29 February 2025.

Form E (Employer’s Annual Return)

Employers must submit Form E to LHDN every year. Form E reports the company’s total number of employees, remuneration paid, PCB deducted, and statutory contributions.

Submission deadlines:

31 March (manual submission)
30 April (online submission via MyTax)

Employers must attach the CP8D (statement of remuneration for each employee) when filing Form E.

Employee Notifications

Certain events during employment require additional reporting to LHDN:

Form CP22: Must be submitted when a new employee joins the company.
Form CP22A: Required when an employee resigns, retires, or their contract ends. This ensures all PCB obligations are settled.
Form CP21: Required when an employee is leaving Malaysia for more than 3 months. This must be filed at least 30 days before the departure date to avoid the employer being held liable for unpaid taxes.

Record-Keeping

Employers are legally required to keep all payroll, PCB, and tax records for at least 7 years. These records may be requested during an audit by LHDN. Maintain both digital copies (e.g., payroll software reports, scanned forms) and physical files for safekeeping.

Common Issues & Solutions

Even with proper systems in place, employers in Malaysia often face challenges when handling PCB. Below are some of the most common issues, along with practical solutions:

Wrong PCB Calculation

This can happen if employee details are not updated. For example, when an employee gets married, has children, or contributes to zakat, but HR does not record it. Wrong deductions lead to employees overpaying or underpaying tax.

Solution: Correct the amount in the following month’s payroll. Employers can also make adjustments using the e-PCB portal or payroll software. Encourage employees to submit Form TP1 whenever they have changes in dependents or reliefs.

Missed Payment Deadline

Employers sometimes overlook the 15th of the following month deadline, especially if it falls close to a public holiday or if payroll processing is delayed. Late payments result in fines and interest from LHDN.

Solution: Always set internal reminders a few days before the due date. Companies using payroll software should activate deadline alerts. If a payment is missed, pay immediately through ByrHASiL or FPX and prepare for a late penalty notice from LHDN.

Employee Resigns Mid-month

When an employee leaves the company, HR must still calculate PCB up to their last salary payment. Many employers forget to submit the necessary forms to LHDN, which may cause issues during audits.

Solution: Deduct PCB for the final salary and submit Form CP22A (for termination) to LHDN. If the employee is leaving Malaysia, submit Form CP21 at least 30 days before departure to avoid liability on the employer.

Dispute Among Employees about the PCB Amount

Employees may question why their PCB deductions are higher in some months (e.g., months when they receive bonuses). Lack of explanation can lead to mistrust between staff and management.

Solution: Be transparent. Use the LHDN PCB calculator to show employees how deductions are derived. Explain that bonuses, allowances, and benefits-in-kind are also taxable and can increase PCB in that month.

System Errors in Submission

Employers sometimes face issues when uploading CP39 files via e-Data PCB or e-CP39, especially if the file format is incorrect.

Solution: Double-check file formats according to LHDN’s requirements. If issues persist, use manual entry via e-CP39 as a backup and contact LHDN’s technical support hotline for assistance.

Best Practices for Employers

Below are practices that every employer should adopt to avoid costly mistakes and maintain compliance with LHDN.

Automate with Payroll Software

Manual calculation often leads to errors, especially when employees have different reliefs, dependents, or bonuses. Payroll software integrated with LHDN systems can automatically calculate PCB, generate CP39 files, and even process payments through FPX. For SMEs, this saves hours of manual work. For larger companies, it prevents compliance gaps.

Update Employee Information Regularly

Employee tax status can change at any time, such as when they get married, have children, or start contributing to zakat. Employers should encourage staff to submit Form TP1 whenever there is a change, and HR should update records immediately in payroll and LHDN systems. Outdated records may result in wrong deductions, leading to employee dissatisfaction or penalties for the employer.

Maintain Accurate Records

Keep both digital and hardcopy records of all PCB deductions, CP39 submissions, receipts, and annual forms. LHDN requires employers to store records for at least 7 years in case of audits. A good practice is to create a monthly PCB file that contains payroll reports, payment receipts, and submission confirmations.

Train HR and Payroll Staff

Tax regulations change from time to time. HR staff should undergo regular training on LHDN updates, use of the MyTax portal, and troubleshooting common PCB issues. This prevents delays and ensures smooth handling of employee queries.

Always Meet Deadlines

Submitting and paying PCB by the 15th of the following month is critical. Employers can set reminders or use payroll software with deadline alerts to avoid accidental late submissions. Missing deadlines not only leads to financial penalties but may also affect the company’s reputation with tax authorities.

Communicate with Employees

Employees often want to know how their PCB is calculated and why the amount changes month to month. Employers should be ready to explain the breakdown using the LHDN PCB calculator or payroll records. Clear communication builds trust and reduces disputes.

FAQs

Do employers pay PCB on behalf of employees?

Yes, employers deduct PCB from employee salaries and remit it monthly to LHDN.

What happens if I pay PCB late?

LHDN may impose fines and late payment interest.

Is PCB the same as Monthly Income Tax Deduction (MTD)?

Yes, PCB and MTD refer to the same thing.

How do I check if the PCB payment has been received by LHDN?

Employers can confirm via the MyTax portal or through their bank receipt.

Can employers adjust PCB if employees have additional tax reliefs?

Yes. Employees can submit Form TP1 to claim additional reliefs, and employers must update deductions accordingly.

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