What is PCB in Malaysia and why is it deducted monthly

PCB stands for Potongan Cukai Bulanan. It is the monthly income tax deduction that employers make from the salaries of employees who are subject to PCB, before paying the amount to the Inland Revenue Board of Malaysia, also known as HASiL or LHDN.

You will usually see PCB as a separate deduction on your payslip. It is deducted to spread your estimated income tax payments throughout the year instead of leaving you with one large payment later.

The amount may change when your salary, bonus, employment details or eligible deductions change. PCB is also not always the same as your final tax payable because your complete tax position depends on your total income, deductions and rebates.

What does PCB mean?

For employees, PCB usually appears as a separate deduction on the monthly payslip. It is different from the Employees Provident Fund (EPF), Social Security Organisation (SOCSO) and Employment Insurance System (EIS) contributions because PCB is an advance payment towards your income tax.

The purpose is to make tax payments more manageable throughout the year. Instead of waiting until the end of the assessment period, part of your estimated tax is paid progressively through your monthly salary by your employer.

How is PCB calculated?

Your employer calculates PCB based on your estimated income for the year and the personal information used in the payroll system. The calculation may include your salary, bonuses, commissions, taxable benefits, tax status, eligible deductions, rebates and PCB already deducted earlier in the year. HASiL allows employers to use a computerised payroll calculation method or its official PCB schedule and online tools. Employers without a computerised payroll system may use e-PCB to calculate, submit, pay and verify monthly tax deductions.

For example, imagine an employee earns RM5,000 a month and expects to receive a RM6,000 bonus during the year. The employer may estimate the employee’s total annual remuneration at RM66,000 before considering applicable deductions, rebates and other personal details. The payroll system then estimates the employee’s annual tax position. It considers how much PCB has already been deducted and adjusts the remaining deductions for the rest of the year.

For a simplified illustration, suppose the estimated PCB for the year is RM3,600. If RM1,200 has already been deducted during the first four months, RM2,400 remains to be collected over the next eight months. This would produce an average deduction of RM300 per month before any further payroll changes. This is only an illustration and not an official PCB calculation. The actual amount may differ because Malaysian PCB is calculated using the prescribed formula, payroll information and applicable deductions or rebates.

Employees can use the official PCB calculator provided by HASiL to check their figures, while the employer’s payroll records remain the reference for the actual deduction.

Why are my PCB deductions sometimes higher or lower?

A change in PCB does not automatically mean that your employer made a mistake. The amount may increase or decrease when your income, personal details or payroll information changes.

Your PCB may increase after you receive a bonus, commission or taxable benefit. It may also rise when you change employers and your new payroll calculation includes income from an earlier job during the same year. If your employer corrects an earlier under-deduction, the adjustment may also appear in a later payslip.

Your PCB may decrease when your monthly pay is lower, you receive less variable income or you take unpaid leave. For example, a month without commission or overtime may result in a lower estimated annual remuneration than the previous month.

The deduction may also decrease after your employer includes eligible information from Form TP1, such as an approved deduction or rebate. Changes in marital status, eligible children or zakat deductions may affect the calculation as well, provided the relevant information has been submitted and accepted for payroll purposes. HASiL provides Form TP1 for employees to claim individual deductions and rebates for PCB purposes. A lower PCB does not necessarily mean that you have paid too much tax or that no tax will be payable later. It simply means that the payroll estimate for that month or the remaining months has changed.

Compare the deduction with your salary, bonus, submitted forms and previous payslips before asking your employer’s payroll team to investigate. For a wider view of how recent tax changes may affect your income and take-home pay, you can read TNG eWallet’s article on Budget 2027 changes for Malaysians.

Differences between form TP1 and TP3

Form TP1 allows an employee to submit eligible individual deductions and rebates for consideration in the PCB calculation. You provide the completed form to your employer, who uses the information when adjusting your monthly deduction. The information you provide must be accurate, and your claim should not exceed the applicable annual limit. Keep the relevant receipts and records for your own reference. TNG Digital’s article on preparing tax relief documents before filing may also help you organise your records, although you should always check the latest HASiL requirements for the relevant assessment year.

Form TP3 is relevant when you have worked for another employer during the same year. It gives your new employer information about your earlier employment so your PCB can be calculated using a more complete picture of your employment income.

HASiL’s 2026 TP3 form states that employers should request it when an employee has worked for another employer during the current year. Without this information, your current payroll calculation may not reflect the income and PCB already recorded earlier in the year.

When must an employer pay PCB?

An employer must deduct PCB from an employee’s remuneration and remit it to HASiL on or before the 15th day of the following month. For example, PCB deducted from an April salary should generally be paid by 15 May. The employer is responsible for making the deduction, submitting the relevant information and paying the amount to HASiL. This responsibility is separate from the way an employee receives their salary. For example, some employers may use TNG eWallet as an alternative salary payment method. This does not replace the employer’s responsibility to calculate and remit PCB according to HASiL’s requirements.

Employees should keep their payslips and annual income statement. If PCB appears to have been deducted but does not appear in your tax records, ask your employer’s payroll team to check the submission.

Is PCB the same as your final income tax?

No. PCB is a monthly deduction made during the year, while your final income tax depends on your complete tax position. Some taxpayers who meet the requirements for Monthly Tax Deduction as Final Tax may elect not to submit an income tax return. However, this option does not apply to every employee.

According to HASiL, you may still need to submit a return if you worked for more than one employer, changed employers during the year, worked for less than 12 months, had tax borne by your employer, chose joint assessment or received non-employment income such as business or rental income. You may also need to file if you want to claim a refund, deduction or rebate. If you are unsure whether PCB can be treated as final tax in your situation, check the latest HASiL guidance or obtain professional tax advice.

Is PCB the same as CP38?

No. PCB is the regular monthly deduction used to collect estimated income tax from employment income. CP38 is an additional instruction from HASiL requiring an employer to make extra deductions from an employee’s remuneration. It may apply when an employee has outstanding tax to be collected. HASiL’s PCB guidance distinguishes regular PCB deductions from additional deductions made under a CP38 instruction. If both PCB and CP38 appear on your payslip, check the descriptions carefully. They serve different purposes and should not be treated as the same deduction.

What should you check on your payslip?

Your payslip should give you a useful record of how your salary was calculated. Check whether the salary, bonus and other payments shown are correct, and look out for changes in PCB compared with the previous month. If the deduction changed, consider whether you received additional income, changed employers or submitted new information to your payroll team. You should also check whether CP38 has been listed separately from PCB.

Keep your payslips, TP1 or TP3 submissions and annual income statement together. These records can help you explain a discrepancy and make the income tax filing process easier.

Key points to remember about PCB

PCB is a monthly payment towards your estimated income tax. It is not an additional fee charged by your employer, and it does not always represent your final tax payable. The most useful approach is to review your payslip, provide accurate information to your employer and keep records of your income and deductions. If you change jobs, earn other income or intend to claim deductions and rebates, review the latest HASiL requirements before deciding what action to take.

Once you understand how PCB affects your take-home pay, you can use GOfinance in TNG eWallet to manage your finances in one place and keep track of your wider financial needs.

FAQs

What does PCB stand for in Malaysia?

PCB stands for Potongan Cukai Bulanan. It is the monthly income tax deduction made by an employer from an employee’s remuneration.

Why is PCB deducted from my salary?

PCB is deducted so your estimated income tax can be paid progressively throughout the year instead of in one large payment.

Can PCB change every month?

Yes. PCB may change when you receive a bonus, commission or taxable benefit, change employers or update information used in the payroll calculation.