Income Tax Exemption In Malaysia And How To File e-Filing 2022
pelepasan cukai 2021

Income Tax Exemption In Malaysia And How To File e-Filing 2022

Tax relief or tax exemption in Malaysia is a system established by the Inland Revenue Board of Malaysia (LDHN) whereby taxpayers are allowed to deduct a certain amount of money from their income tax. Some types of assistance include life insurance, medical expenses for parents, individual education fees, the purchase of a laptop or smartphone. With tax relief, it allows you to reduce your taxable income which will affect the tax rate charged.

If you manage your taxes well, not only it can save you a huge amount of money but also help with your personal financial management. Whether you are new to work or need a refresh on this topic, this complete guide can teach you how to fill up e-Filing for 2021 and tax deduction, relief, and rebate that you can claim.

Are You Eligible For Income Tax In Malaysia?

Who Needs To Pay For Income Tax?

If you are currently employed, you will definitely receive a salary slip. You will need to pay tax if your monthly salary is about RM2,833.33 (or more than RM34,000 per year) after deduction from the Employees Provident Fund (EPF). Also, some companies may deduct tax from your salary.

If you are a freelancer who receives income from a Malaysian company or owns a business, you will also need to pay tax if your annual income amounts to RM34,000 a year.

Why Should We Pay Income Tax?

The taxes you pay will be used by the government for national development such as building infrastructures, paying government officials, scholarships, facilities such as public recreation parks, educational institutions, health initiatives, security, defense, pensions, and including scientific and medical studies.

Consequences Of Not Paying Income Tax

1.     Charged with 10% penalty

If you do not pay taxes, you could be penalized 10% of your taxable income. Assuming you have exceeded a month of not paying your income tax, you can be charged another 5% penalty. This can potentially be a source of outstanding debt so it is best that you settle your tax payments as soon as possible. For the list of full offenses, refer to LHDN website.

2.     Court action

If you still do not pay your taxes after a period of time, do note that court action can be taken. Your property and personal belongings can be confiscated by the government. You can also be jailed if the tax debt remains unresolved even after your property is confiscated.

3.     Not allowed to leave the country

Travel restrictions can be imposed if you have overdue outstanding debts. This can happen even if you are a director of a Malaysian company who does not declare or pay income tax. This can impact both your business as well as the quality of your life.

Complete Guide To Fill LHDN e-Filing 

How to register e-Filing

Registration can be made online through the official portal edaftar.hasil.gov.my. For first time users, follow these easy steps below:

1. Complete your registration form online

To register for the first time, visit https://edaftar.hasil.gov.my/individu/dafsgjpnvdprd.php

tax exemption malaysia
Image source: Hasil

After completion, you will be given an application number that looks like this, for example, Ai-a68792fu7979e32. Don’t forget to write down that number in case you would want to check the status of your application later on.

2. Upload the necessary documents needed 

You will then be asked to upload a copy of the following document:

  • Passport for non-Malaysian citizens who do not own any business
  • Business registration certificate (SSM) for Malaysian citizens who owns and operates a business
  • Passport and business registration certificate for non-Malaysian citizens who operates a business

When uploading your identification card (NRIC), ensure that your name and number are visible and clear.

3. Check application status

After a few days, you can check your online application status at https://edaftar.hasil.gov.my/individu/info.php

If your application has been confirmed, you will be given a PIN number that will be used to fill up your e-Filing later on.

Disclaimer: e-Daftar application will be canceled if no complete documentation is received within the course of 14 days from the application date and the applicant will need to re-apply again with complete documentation. 

How to fill up e-Filing for first timers

These are the steps to fill up e-Filing online through the ezHASiL portal:

  1. Visit ezHASiL and go to the website menu Customer Feedback. Then, click on e-Filing PIN Number Application.
  2. Download Form CP55D and fill in the required information. Then, scan your IC in PDF format. After your document is successfully uploaded, click “Next”.
  3. Fill in the required information. Make sure your email address is correct because LHDN will send a reference number to your email. Once you have completed and uploaded the required documents, click “Submit” and LHDN will provide a Pin Number for you to review the application after 7 working days.
  4. Login to e-Filing ezHASiL Portal.

How to fill up e-Filing for register users

  1. Visit the ezHASiL portal and in the Login section fill in all the required information then click ‘Submit’.

Image Source: ezHASiL

2. You will then be taken to the e-Form page. Make sure you select the correct e-Form either:

  • e-E: Employer Tax Return Form
  • e-BE: Malaysian citizen without business income
  • e-B: Malaysian citizen with income from business
  • e-BT: Malaysia citizen with knowledge or expert worker
  • e-P: Business partnership
  • e-M: Individual who is non-resident
  • e-MT: Non-resident with knowledge or expert worker

For working individuals without a business select the e-BE form.

Information in the form is divided into 4 parts namely:

  • Individual Particulars
  • Statutory Income, Total Income And Non-Employment Income of Preceding Years Not Declared
  • Deduction / Rebate / Tax Deductions / Tax Relief
  • Summary

3. Fill in all the information required to facilitate the process of calculating your total income tax. Finally, you need to confirm the assessment form and then send it to LHDN online.

If you are already satisfied with the completed form, click on ‘Sign & Submit’. Then, a Signature screen will be displayed. Enter your Identity Card Number and Password to submit the completed form.

List of Tax Exemption in Malaysia Year of Assessment 2021 (e-Filing 2022)

(For resident individuals as updated on 11 January 2022)

1. Individual’s Tax Exemption
  • Individual and dependent relatives: RM9,000
  • Disabled individual: RM6,000
  • Disabled husband / wife: RM5,000
  • Husband / wife / payment of alimony to former wife
  • Education fees (Self): RM7,000

2. Lifestyle, Medical & Related Equipment Tax Relief
  • Medical treatment, special needs and carer expenses for parents: RM8,000
  • Purchase of basic supporting equipment for disabled self, spouse, child or parent: RM6,000
  • Lifestyle: RM2,500
    • Purchase and subscription of reading materials
    • Purchase of personal computer
    • Smartphone / Internet
    • Purchase of sports equipment, gym membership
    • Additional RM2,500 for purchase of personal computer, smartphone and tablet
  • Additional lifestyle RM500 related to sports activity
    • Purchase of sports equipment
    • Rent / fee at any sports facility
    • Competition registration fee
  • Domestic travel expenses: RM1,000
    • Accommodation at a registered premises/hotel (Expenses incurred on or after 1 March 2020 until 31 December 2021)
    • Entrance fee to tourist attraction
  • Purchase of breastfeeding equipment: RM1,000
    • Female taxpayers only
    • Child under age of 2 only
    • Claims are made once every 2 years
  • Medical expenses for severe illness, fertility treatment expenses & full medical examination (Self, spouse, or child) restricted to RM8,000 (including full medical treatment, COVID19 detection test, and approved vaccination limit restricted to RM1,000)

3. Child Tax Relief
  • Child aged 18 & below
  • Child aged 18 & above: RM2,000 (unmarried / studying full time)
  • Child aged 18 & above: (unmarried / studying in IPT)
  • Payment for child care fees / registered child care centre: RM3,000
  • Disabled child: RM6,000
    • Additional for disabled child RM8,000 (studying in IPT – Diploma / abaove)

4. Contribution / Donation
  • Life Insurance and EPF *civil servants and pensioners RM7,000 or
  • Besides civil servants *life insurance / takaful RM3,000
  • EPF / Approved schemes: RM4,000
  • PERKESO: RM250
  • Retirement and deferred annuity scheme: RM3,000
  • Medical and education insurance (individual / spouse / child): RM3,000
  • SSPN (net savings): RM8,000

Tax Payment Method

There are several ways to pay your income tax, including through FPX, credit cards, debit cards, LHDNM payment center counters, banks, post offices, and money transfers from abroad. For more information.

Pay Tax And Avoid Debt

Once you have filled and submitted the form for tax e-Filing, you will need to pay the amount listed as taxable income. Remember, you will be charged a 10% penalty in case of late payment and the next 5% would be charged if it is not paid after a month. If you want to avoid penalties and bad debt, it’s best to complete e-Filing and pay taxes as soon as possible. Be a responsible Malaysian so that your life, family, neighbors, and friends in this country can continue to remain peaceful and comfortable.

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