What is PCB, and am I being deducted correctly?

What PCB actually is

PCB is not an extra tax. It is your ordinary income tax, paid in monthly instalments instead of one lump sum at the end of the year. Each payday your employer withholds an amount from your salary and sends it to LHDN on your behalf, as an advance towards your tax bill for the year. When you file, everything is added up: if too much was withheld, you get the difference back; if too little, you pay the rest.

Where the number comes from

LHDN publishes an exact method — your employer does not guess. The idea is simple, told as a story: your employer takes what you earn this month and projects it across the whole year to estimate your total income. From that it works out the tax you would owe for the full year, using the official tables and the deductions you qualify for. It then subtracts the tax already taken from your earlier paydays this year, and spreads whatever is left evenly over the paydays you have remaining. That share is this month's PCB.

In the official shorthand, the year's tax is estimated as (P − M) × R + B — where P is your projected yearly income after deductions, and M, R and B come from LHDN's tables. In ordinary words: take your projected income, apply the right rate for your income band, and adjust for the standard reliefs already built in. It looks like a formula, but it is really just "estimate the year's tax, subtract what you've already paid, and divide the rest over the months you have left."

What changes your PCB

Two people on the same salary can have very different PCB. These are the things that move it:

• Your category — single; married with a non-working spouse; or married with a working spouse (also divorced, widowed, or single with an adopted child). A non-working spouse adds a deduction that lowers your PCB.
• Your children — each qualifying child adds a deduction, and children in higher education or with disabilities count for more.
• Your EPF — your monthly EPF contribution is subtracted before the tax is worked out, up to the official yearly limit.
• Your TP1 deductions — optional reliefs (insurance, medical, books, childcare and the like) that you can declare to your employer on a TP1 form during the year, so your PCB drops now instead of waiting for a refund at filing.

A worked example

Here is a real calculation, run live by the same engine that powers our calculator — verified against LHDN's own figures. Nothing here is typed by hand; change one input and every number below would change with it.

So in an ordinary month, RM110.00 is withheld from this person's salary and paid to LHDN as an advance on their income tax — no more, no less.

Why your PCB jumps in a bonus month

This is the most-asked payroll question in Malaysia: "I got a bonus — why did so much tax come out?" It is not a penalty, and nothing has gone wrong. A bonus is extra income, so it lifts your projected income for the whole year, which pushes you further up the tax tables. LHDN's method works out the extra tax the bonus causes and deducts it in the month you receive it — on top of your normal PCB.

Take the same person as above, now receiving a RM8,250.00 bonus this month. Here is their ordinary month set against their bonus month — every figure computed live:

So the bonus month deducts RM867.50 instead of the usual RM110.00. The difference — RM757.50 — is simply the tax on the bonus, brought forward to the month it was paid. Over the full year it evens out: you have not been charged extra tax, only earlier.

Is my deduction correct?

PCB is an estimate, and it is only as right as the details your employer holds about you. It is worth a check:

• Is your category right? If you married, divorced, or your spouse started or stopped working, tell your employer — it changes your PCB.
• Are your children recorded? Each qualifying child lowers your PCB, and employers often don't know unless you tell them.
• Does the EPF on your payslip match what's actually deducted? EPF reduces the income your PCB is based on.
• Remember PCB is only an estimate. It is trued up when you file your taxes — the filing is what's final, not the monthly deduction.

If your PCB added up to more than your actual tax for the year, the excess comes back to you as a refund when you file. If it added up to less, you simply pay the difference. Either way PCB is a running advance, not the last word — so a month that looks high, like a bonus month, is usually settled by the time the year is done.