Did you notice?

your monthly income tax deduction for PCB is higher this year? That is if your income is below RM10k, which I believe most of us are. So my post below will apply for this income bracket.

Starting this year, LHDN are using new PCB deduction calculation and from their new formula, our monthly PCb deduction is higher now than before. For e.g. for someone with RM4k income, for last year, his PCB would be RM140. But for this year his PCB would be RM170 i.e. RM30 more.

LHDN's reason for the above change? They say to target for 'actual tax' or something like that, so at the end of the year, when we get our bonuses, they will deduct less PCB, and they won't need to repay us the excess tax. Yeah right, that is IF we get bonus this year, in current economic climate.

I know to their defence is, if they over taxed, they will return the excess to us (which to their credit, lately is done within a few months, a vast improvement since last time), but haven't they heard of the saying 'RM100 today is better than RM100 tomorrow'. That's inflation for you. For RM100 today, assuming 4% inflation rate, you really need RM104 to get the same value next year.

And also, their move contradicts EPF's move to allow lower EPF deductions so the public will have more disposable income. For e.g. for the same person above, 11% EPF is RM440, but with 8% EPF, it's RM320. So that's RM120 more disposable income for him, if we ask EPF. But bring LHDN into the picture and he need to pay RM30 more PCB so that'll leave him with just RM90 more disposable income.

I'm not saying LHDN's move is not right. By targeting for actual tax, it'll reduce their burden and also saves us from the wait of receiving the returns. But the timing is a bit questionable. I guess, it's just waiting for someone to discover this turn it into a big issue. And as usual nowadays, will probably be with some political influence as well...