Filing taxes for the first time? You’ve got till April 30th 2021 to do it, with a grace period until May 15 2021. You should definitely do so in order to not incur any penalties!
Don’t worry, it’s not as hard or as complex as you think.
In fact, if it’s your first time, here’s what nobody tells you: you’re probably eligible for an income tax refund!
Why? Well, if you pay a monthly tax deduction from your salary (PCB or Potongan Cukai Bulanan in your payslip), there’s a chance you’ll get some money back via tax reliefs, deductions and rebates.
What Are Tax Reliefs, Deductions Or Rebates?
Income Tax Reliefs
To put it simply, income tax reliefs reduce your chargeable income, which will eventually reduce the amount of tax you have to pay!
For example, let’s say your annual taxable income is RM40,000.
Based on this amount, the income tax you should be paying is RM1,000 (at a rate of 8%).
However, if you claim a total of RM11,600 in tax relief (from purchases such as books, a laptop or a smartphone), this would reduce the amount of taxable income from RM40,000 to RM28,400.
Hence, the income tax you should be paying is reduced to about RM402. That’s a difference of RM598!
If this sounds too good to be true, it isn’t. Check out what tax reliefs every Malaysian is allowed to claim for here.
Income Tax Deductions
Similarly, tax deductions help reduce the final amount of taxes you pay, albeit as a different part filing your income tax. The end result is the same though!
The commonly claimed tax deductions are donations, gifts, and contributions, such as a gift of money to a charity, organisation, or even the government. Members of professional bodies who pay a subscription fee can also claim it as tax deductible.
Find out more tax deductions here!
Income Tax Rebates
Lastly, income tax rebates reduce the final tax charged instead of the chargeable income from your 2020 salary.
Here’s a better example: let’s say you had a total annual income of RM45,000. In tax reliefs, you claim RM11,500. This brings your chargeable income down to RM33,500.
Hence, your final payable income tax will be around RM555.
Without a tax rebate, RM555 would be the amount of tax that you have to pay. However, if you claim an income tax rebate of RM400, you’ll only owe RM155 in tax!
Tax rebates in Malaysia include zakat, fitrah or rebates for married couples with joint tax files.
How Do You Get Your Cash In The Form Of Income Tax Refund?
Here’s the best part - if you’ve paid monthly tax deductions from your salary (let’s say RM200 monthly or RM 2,400 yearly), yet your final payable income tax is only RM2,000, you’re eligible for a RM400 return in cash!
That’s right, you should be getting your refund in your registered bank account within 30 days of filing your income tax.
How To Claim Tax Reliefs & Rebates To Get Your Refund
1. Kickstart your e-Filing process
For first-timers who are filing taxes online, you’ll need to visit https://edaftar.hasil.gov.my/ and click on the Daftar Individu button.
You will then be asked to fill in an online form. Print it and visit your nearest LHDN branch (your nearest UTC!) where you will be given a first-time login PIN.
2. Log in to MyTax and Start e-filing
Once you have your new PIN, navigate to the MyTax website and log in using the First Time Login option.
Choose the relevant income tax form for the year 2020 (if you’re a Malaysian salaried employee, it should be Form BE or e-BE.
3. Update your details
Start by reviewing your personal details to ensure they’re accurate.
4. Provide your income details
Next, fill in the form with your income information. This is also where you claim tax deductions (donations or gifts that you have given).
You should also check if the total monthly tax deductions (MTD/PCB) is accurate! It is usually provided in the EA Form by your employer.
5. Here comes the fun part - tax reliefs!
Show proofs of purchases you made in 2020 that will give you tax reliefs. However, it’s important to remember to retain the proof of purchase of that item for at least seven years!
6. Check your summary, sign, and send
Once you have filled up all the reliefs and rebates, the system will automatically calculate your taxes, so you’ll know if you need to pay income tax or receive refunds in your bank account!
One final step is to declare that all the information provided is true by simply clicking on the ‘Sign and submit’ button on the final page.
BigPay believes in managing your money better - that means managing your income tax refunds too!
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