Chapter 8

Overpaid Taxes Can Be Refunded In The Form Of A Tax Return

pay income tax Malaysia

If you do find yourself overpaying your taxes when you file it, don’t worry, you can get back the additional taxes you’ve paid in the form of tax return or income tax refund.

What is a tax refund?

Tax refund is the amount you have overpaid your taxes. This commonly occurs when the taxpayer is subjected to a monthly tax deduction (MTD). You will get a tax refund from LHDN if your MTD totals more than you need to pay in tax for your income bracket.

This overpayment happens as the MTD does not take into account all the additional tax reliefs. For example, unscheduled expenses for medical care and unplanned purchases on items you can claim tax relief. This includes personal computers, gym membership or books.

Things that your MTD does not take into account

One important thing is that your monthly tax deduction does not take into account tax reliefs. For people who are subjected to a monthly tax deduction, more often than not they end up paying more income tax than what they’re supposed to.

Here are things that the monthly deduction does not take into account;

  • Additional tax reliefs
  • Unplanned expenses like medical expenses

How to get your income tax refund

If you are using income tax e-filing to file your tax, you will need to provide your bank account details correctly.  You will be getting your refund credited directly into their bank accounts within 30 days after the declaration is made.

There was a big change in refund timeframe from the Year of Assessment 2013. Any taxpayers who do not receive their refund from LHDN within the 30 days will be compensated. If the terms and conditions are met for the late refund, the taxpayers will be given 2% compensation.

If you do not provide bank account details to LHDN and received your tax refund by cheque, there is an update. The cheque payment method will be replaced with a new voucher system. This is known as the income tax refund voucher system (BBBC). The voucher for tax refund in Malaysia can only be banked in or cashed out at CIMB and CIMB Islamic branches in the country.

How to check your tax refund status

You can login to your LHDN online e-filing account.  Go to the  ‘Services’ tab and select the ‘Refund Status’ button. After you enter your income tax reference number and identity card (IC) number, you will be able to see your refund status.

If your tax refund has already been processed by LHDN, you can see the tax refund payment details. This includes the date and amount refunded. It is important to ensure that the bank account details you provide LHDN is accurate to avoid any glitches in the tax refund process.

iMoney income tax calculator

iMoney's Income Tax calculator
Check how much income tax you’ll pay with the Malaysia income tax calculator.
‹ Previous Next: Guide To Using LHDN e-Filing To File Your Income Tax

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