Taxation 101 : Income Tax

The deadline to file your income tax is looming on the horizon. For most of us, this is something tedious but it needs to be done on an annual basis. For others, especially first-timers, this could seem daunting. However, fret not, here is a brief guide on income tax to assist you if you are filing income tax for the first time.

Who needs to file for income tax?

  1. Individuals whose total annual income (after EPF deduction) is RM34,000.00 and above;
  2. Individuals who earn income from business;

The timeline to file your income tax is as below:

IndividualNo later than 30 April in the year following the assessment[1].
Individual carrying on businessNo later than 30 June in the year following the assessment[2].

How to file income tax?

Below is a brief step to step guide on filing your income tax[3]:

  1. Register yourself as a taxpayer, along with the necessary supporting documents at http://edaftar.hasil.gov.my
  2. Once you have registered, you will receive an application number. You will then have to wait for your application to be processed.
  3. Once your application is processed, you will receive a tax reference number and a PIN number.
  4. Log into the website above using your Mykad/ Passport number, tax reference number and PIN number.
  5. Fill in the necessary information and submit your registration.
  6. Once the above is done, your account and digital certificate will be registered and you can proceed to file your tax returns online.
  7. Using the correct form:
    1. Declare your income;
    2. Key in tax rebates, reliefs and exemptions; and
    3. Calculate the total tax payable.
  8. Declare your taxes.

Common income tax offences

1. Failing to file income tax

This is probably the most common offence that a person commits. The law is basically this: if a person does not file their tax return when they are expected to do so without any reasonable excuse, he can be liable to a fine not less than RM200.00 up until RM2,000.00 or imprisonment not exceeding 6 months or both[4].

2. Failing to file a proper tax return

Assuming that a person filed their tax return, they would then need to ensure that the information they are given is accurate i.e. no information was omitted or no income was understated by them. Unless the mistake was a genuine one, he can be liable to a fine not less than RM1,000.00 up until RM10,000.00 and is also liable to pay twice the amount of tax that is due to to the Inland Revenue Services[5].

3. Failing to keep proper records

Individuals, including those who are running a business must keep sufficient records of the documents (such as receipts, vouchers, statement of income and expenditure etc.) that can verify their chargeable income and tax payable for at least 7 years[6], regardless of whether they are paying taxes or otherwise. This includes electronic records[7], and original copies of such records if the records are converted into electronic copies as well[8]. Failure to do so can subject the individual to a fine of RM300.00 up until RM10,000.00 or imprisonment not exceeding one year or both[9].

4. Tax evasion

The more serious offence is the law term as tax evasion. It occurs when a person intentionally evade or assists another person evade the filing of income tax by[10]:

  1. Leaving out certain income that should have been including in the filing of the income tax;
  2. Falsifying records, information given, statements to questions requested by the authorities;
  3. Prepares, maintains or authorizes the preparation of false records; or
  4. Collude or authorizes in fraud, art or a scheme to avoid tax.

A person who evades tax can be liable to a fine not less than RM1,000.00 up until RM20,000.00 or imprisonment not exceeding 3 years or both[11]. In addition to the punishment above, he is also liable to pay 3 times the amount of tax that is due to the Inland Revenue Services[12].

5. Giving bad advice

If a person is helping another with their tax filing or is giving advice on how it should be filed, the person should bear in mind that giving bad advice can also land him in hot soup. Unless he can satisfy the court that the advice or assistance he gives was given with reasonable care, he can be liable for a fine not less than RM2,000.00 up to RM20,000.00 or imprisonment not exceeding 3 years or both[13].

Do take note that a person can be barred from leaving the country if you do not pay your tax[14]. If he still insists on leaving the country, he can be liable to a fine not less than RM200.00 up until RM2,000.00 or imprisonment not exceeding 6 months or both. 

Therefore, always make sure you file your income tax when it is due and make sure it is filed proper. If you have trouble filing your income tax, do take some time to consult the professionals in this field, as it could potentially save you from unwanted issues later on.


1. Section 77 (1)(b), Income Tax Act 1967.
2. Section 77 (1)(a), Income Tax Act 1967.
3. A comprehensive guide on how to file your income tax can be found at http://edaftar.hasil.gov.my/
4. Section 112 (1), Ibid.
5. Section 113 (1), Ibid.
6. Section 82 (1)(a) and Section 82A (1), Ibid.
7. Section 82 (7)(a) and Section 82A (4)(a), Ibid.
8. Section 82 (7)(b) and Section 82A (4)(b), Ibid.
9. Section 119A.
10. Section 114 (1), Ibid.
11. Ibid.
12. Ibid.
13. Section 114 (1A), Ibid.
14. Section 104(1), Ibid.


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