Reduction of Individual Income Tax Rates
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As a measure to increase disposable income of the middle-income group and to address the rising cost of living, the Budget proposed that the individual income tax rates for resident individuals be reduced by 2 percentage points for the 3 chargeable income bands as follows:-
Chargeable Income
(RM)
|
Current Tax Rates
(%)
|
Proposed Tax Rates
(%)
|
0-5,000
|
0
|
0
|
5,001-20,000
|
1
|
1
|
20,001-35,000
|
5
|
3
|
35,001-50,000
|
10
|
8
|
50,001-70,000
|
16
|
14
|
70,001-100,000
|
21
|
21
|
100,001-250,000
|
24
|
24
|
250,001-400,000
|
24.5
|
24.5
|
400,001-600,000
|
25
|
25
|
600,001-1,000,000
|
26
|
26
|
1,000,000 and above
|
28
|
28
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Income tax savings resulting from the reduction of tax rates are as follows:
Chargeable
Income
(RM)
|
Current
Tax Rates
(%)
|
Tax Payable
(RM)
|
Proposed
Tax Rates
(%)
|
Tax Payable
(RM)
|
Tax
Savings
(RM)
|
Tax
Savings
(%)
|
0-5,000
|
0
|
0
|
0
|
0
|
-
|
-
|
5,001-20,000
|
1
|
*0
|
1
|
*0
|
-
|
-
|
20,001-35,000
|
5
|
*500
|
3
|
*200
|
300
|
60
|
35,001-50,000
|
10
|
2,400
|
8
|
1,800
|
600
|
25
|
50,001-70,000
|
16
|
5,600
|
14
|
4,600
|
1,000
|
17.86
|
70,001-100,000
|
21
|
11,900
|
21
|
10,900
|
1,000
|
8.40
|
100,001-250,000
|
24
|
47,900
|
24
|
46,900
|
1,000
|
2.09
|
250,001-400,000
|
24.5
|
84,650
|
24.5
|
83,650
|
1,000
|
1.18
|
400,001-600,000
|
25
|
134,650
|
25
|
133,650
|
1,000
|
0.74
|
600,001-1,000,000
|
26
|
238,650
|
26
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237,650
|
1,000
|
0.42
|
1,000,000 and above
|
28
|
|
28
|
|
|
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*After tax rebate of RM400 for chargeable income up to RM35,000
Effective Date: From year of assessment 2018.
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Tax Exemption on Rental Income from Residential Homes Received by Malaysian Resident Individuals
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To encourage Malaysian resident individuals to rent out residential homes at reasonable charges, the Budget proposed that 50% income tax exemption be given on rental income received by Malaysian resident individuals subject to the following conditions:
i. rental income received not exceeding RM2,000 per month for each residential home;
ii. the residential home must be rented under a legal tenancy agreement between the owner and the tenant; and
iii. tax exemption is given for a maximum period of 3 consecutive years of assessment.
Effective Date: From year of assessment 2018 until year of assessment 2020.
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