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The Definitive Guide To Personal Income Tax In Malaysia For 2016

Find out everything you need to know about filing your personal income tax in Malaysia by April 2016!

Chapter 6

What Is Tax Rebate?

tax rebate in malaysia

Cut your tax with tax rebates!
Image from Aegon Life 

The example in the previous chapter shows a tax amount of more than RM4,000 – that’s quite a big sum. But this may not be your final tax yet. The last step you can make to reduce your tax is through tax rebate.

Most people confuse income tax rebate with income tax relief. The difference between the two is: a tax relief is deduction from the total income to derive your chargeable income, whereas tax rebate is deducted from the actual taxed amount.



Here’s an example of how Malaysia income tax rebate is calculated:

Chargeable income after tax reliefsRM34,610
Total taxRM880.50
As the chargeable income is less than RM35,000, this married taxpayer is eligible for an additional RM400 tax rebate
Total tax after tax rebate = RM880.50 – RM400
= RM480.50

There are two types of tax rebate applicable for Year of Assessment 2015.

  1. Wife/Husband tax rebate of RM400 for those with chargeable income of less than RM35,000
  2. Zakat/Fitrah, which is subject to the maximum of tax charged
zakat for income tax

A compulsory payment for charity.Image from cahayaislam.net 

Zakat or tithe is a compulsory payment for all Muslim around the world, hence, the zakat is applicable only to Muslim taxpayers. It is a compulsory payment for charity and can be calculated via the Muslim taxpayer’s acquired wealth or income.

Zakat is collected to assist the less fortunate, where the fund will be distributed to different channels and handed to those who need it most.

Muslims in Malaysia could serve jail time or be forced to pay a hefty fine if they are found to skip their zakat payment on purpose (Syariah Criminal Enactment Law).

The zakat tax rebate allows Muslims to not be required to pay two overlapping compulsory payments each year.

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