How to File Income Tax in Malaysia

(Template) New Blog Article Facebook Post – 2026-02-13T173336.581

Published On: 12/02/2026By yunice

Complete Employer, HR & Payroll Compliance Guide (MyTax, e-Filing, EA Form & PCB Explained)

Income tax season is one of the most critical compliance periods for Malaysian employers. While individual employees are responsible for submitting their own tax returns, HR and payroll teams play a central role in ensuring accurate reporting, correct EA Form issuance, and alignment with LHDN (LHDNM) records.

With Malaysia’s tax filing system now fully digital via MyTax e-Filing, employers must ensure payroll data, PCB (Potongan Cukai Bulanan) deductions, and statutory reporting are consistent and compliant.

This guide explains:

Who needs to file income tax in Malaysia
Income tax filing deadlines
Required documents (including EA Form)
Step-by-step MyTax e-Filing process
EPF & insurance tax relief rules
Common mistakes employers should help employees avoid
Why income tax compliance matters for HR governance

Who Needs to File Income Tax in Malaysia?

Income tax filing obligations apply to more than just salaried employees.

An individual must file income tax if they fall into any of the following categories:

Salaried employees earning above the taxable threshold
Individuals earning more than RM37,333 annually (after EPF deductions)
Freelancers, gig workers, e-hailing drivers, and delivery riders
Self-employed individuals and business owners
Individuals registered with LHDN and issued a Tax Identification Number (TIN)
Employees with multiple income sources (salary + rental + freelance income)

Even if no tax is ultimately payable, individuals with an active tax file may still be required to submit a return.

From an employer’s perspective, this means ensuring accurate payroll reporting and timely EA Form issuance.

Income Tax Filing Deadline in Malaysia (2026 Assessment Year)

Income tax in Malaysia is assessed annually based on the calendar year (1 January – 31 December).

For most individual taxpayers:

March–April: Filing period opens
e-Filing submissions generally receive an extended deadline compared to manual filing

Late submission may result in:

Penalty assessments
Increased tax payable
Enforcement action by LHDN

HR teams should encourage employees to file early to avoid last-minute portal congestion and documentation errors.

Essential Documents Required for Income Tax Filing

Before filing via MyTax e-Filing, individuals must prepare supporting documents.

Key Documents Include:

EA Form (issued by employer)
EPF contribution statement
Insurance and takaful premium statements
Lifestyle and medical receipts
Donation receipts (approved bodies only)
Business income and expense records (if applicable)

⚠️ Important Compliance Rule:
All tax-related documents must be retained for seven (7) years, as required by LHDN for audit purposes.

For HR, issuing accurate EA Forms before the statutory deadline is critical to prevent employee reporting discrepancies.

How to Register for a Tax Identification Number (TIN)

First-time taxpayers must register before filing.

Registration is completed online via:

MyTax portal
e-Daftar system

This applies to:

New employees
Freelancers and gig workers
Individuals who have never been issued a tax number

Upon approval, LHDN will issue a Tax Identification Number (TIN), which is mandatory for income tax filing.

Step-by-Step: How to File Income Tax in Malaysia (MyTax e-Filing)

Income tax filing is completed through the MyTax system.

General e-Filing Process:

Log in to MyTax
Select the correct tax form (e.g., BE for salaried employees, B for business income)
Enter employment income based on EA Form
Declare additional income sources
Claim eligible tax reliefs
Review tax computation summary
Submit return
Download and save the acknowledgement slip

For employers, the critical compliance checkpoint is ensuring:

EA Form figures match payroll records
PCB deductions align with reported income
Statutory submissions are consistent with LHDN data

Any mismatch may trigger employee complaints or audit queries.

Taxable vs Tax-Exempt Income in Malaysia

Understanding income classification reduces filing errors.

Common Taxable Income

Salary and wages
Bonuses and commissions
Fixed allowances
Business or freelance income
Rental income
Foreign-sourced income (subject to prevailing rules)

Common Tax-Exempt Income

Dividends from Malaysian companies
EPF dividends
Inheritance and hibah
Gifts not related to employment
Certain government allowances

Misclassification may result in overpayment or under-declaration.

Tax Reliefs Malaysians Can Claim (2026)

Tax relief reduces chargeable income and lowers overall tax payable.

Common categories include:

Individual relief
Spouse and child relief
Lifestyle purchases
Medical expenses
Education fees
Approved donations

Relief limits are updated periodically in the national budget. Employers should avoid advising employees beyond official guidelines and instead direct them to LHDN references.

EPF & Life Insurance Tax Relief (High-Impact Section)

EPF-related reliefs are among the most frequently claimed deductions.

Relief Limits:

EPF contributions: Up to RM4,000
Life insurance or takaful premiums: Up to RM3,000
Combined maximum relief: RM7,000

Additional Notes:

Pensionable public servants may claim eligible life insurance and voluntary EPF contributions
i-Lindung insurance plans may qualify, subject to LHDN approval
EPF dividends are fully tax-exempt and do not need to be declared

Accurate payroll records directly support correct EPF reporting and relief calculation.

Common Income Tax Filing Mistakes (HR Risk Areas)

Mistakes during filing can lead to penalties or audit exposure.

Common issues include:

Failure to declare all income sources
EA Form inaccuracies
Incorrect PCB reconciliation
Overclaiming tax relief
Claiming without valid receipts
Late submission
Poor document retention practices

Employers reduce risk by ensuring payroll data integrity and timely statutory documentation.

Why Income Tax Compliance Matters for HR & Employers

Income tax filing may be an individual obligation, but employer accuracy directly affects outcomes.

Strong payroll governance ensures:

Accurate EA Forms
Correct PCB deductions
Reduced employee disputes
Lower audit exposure
Improved regulatory compliance
Higher employee trust

When payroll data, statutory deductions, and MyTax records align, organisations reduce compliance risk significantly.

Strengthening Tax Season Readiness Through Structured HR Systems

Manual payroll processes increase the likelihood of EA Form discrepancies, incorrect PCB deductions, and reconciliation issues during tax season.

Many Malaysian employers now centralise:

Payroll calculations
PCB automation
EPF & statutory reporting
EA Form generation
Employee data management

With an integrated HR and payroll system, tax documentation remains consistent, traceable, and audit-ready — reducing stress during income tax season.