What is CP38?
CP38 is an additional tax deduction issued by LHDN. Employers are required to make additional monthly deduction on their employees’ salaries in the form of instalments.
The tax deduction is calculated based on the employee’s monthly taxable income. This is based on the Tax Deduction Chart issued by the Internal Revenue Board of Malaysia (IRBM).
Purpose of CP38 Deduction
CP38 contribution is in addition to the existing PCB contribution amount. CP38 is used to pay off outstanding income tax.
Difference between PCB and CP38
CP38 is used to ease the burden of those who are required to pay tax immediately. By having the employer deduct a certain amount from their salary every month for a certain period of time, the employee will be able to manage their finances better and not be burdened by the large amount of tax payment.
CP38 contribution has to be instructed by the IRB. The amount deducted and the period of deduction must be instructed by the IRB.
PCB on the other hand is used to reduce the income tax payable during your annual income tax declaration.
How to submit and pay your PCB and CP38?
For employers that do not have a computerised payroll system, PCB payment is made using e-CP39. This is an online platform that employers use to submit their Monthly Tax Deduction and payments.
e-Data is used by employers that have a computerised payroll system. The employer will use the payroll system to generate a text file containing all the Monthly Tax Deduction information and submit it in using e-Data. Payment will be made using FPX services in e-Data. The use of e-Data saves times and simplifies the monthly payroll contribution submission.
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