Updated: Jul 15
Update: The Ismail Sabri Government Budget is no longer applicable. Malaysia's national budget for 2023 was re-tabled again in February 2023.
To Download Revised Budget 2023 Speech and some other related publications - https://www.ccs-co.com/post/budget-2023-malaysia-madani
Subsection 49(1) of the ITA provides that a deduction up to RM 7,000 can be claimed by an individual on –
payment of premium on life insurance policy;
contribution to an approved scheme (other than a private retirement scheme) made by the employee or by a self-employed person within the meaning of the Employees Provident Fund Act 1991 [Act 452]; or
contribution made under any written law relating to widow, widower and orphan’s pension or under any approved scheme within the meaning of any such law.
From the year of assessment 2022, the scope of individual income tax relief for EPF contributors is expanded to include self-employed voluntary contributors including civil servants under the pension scheme
For civil servants under the pension scheme not voluntarily contributing to EPF, income tax relief on takaful contribution or life insurance premium payment can be claimed up to RM7,000.
To further encourage voluntary contribution to increase savings in preparation for old age, it is proposed tax relief for life insurance premium or takaful contribution be restructured as follows:
This new treatment is applicable to civil servants under the pension scheme.
From the year of assessment 2023.
EPF is a government-managed retirement savings fund in Malaysia that requires both employers and employees to make regular contributions to the fund.
The fund serves as a social security net for employees and provides retirement, disability, and death benefits.
By encouraging voluntary contributions to the EPF, the government hopes to ensure that individuals have enough savings for their retirement years, thereby reducing the burden on social welfare programs in the future. The tax relief is a way to incentivize individuals to prioritize their retirement savings and take responsibility for their financial future.
Expanding the annual tax relief scope to include voluntary contributions to the Employees Provident Fund (EPF) of up to RM3,000 is welcomed by the EPF.
This initiative is available to all employees, regardless of whether they work in the formal or informal sector and make voluntary contributions to the EPF. Consequently,
EPF members who contribute compulsorily (up to RM4,000 tax relief) and increase their savings through voluntary contributions will be eligible for tax relief of up to RM7,000.
This measure aims to encourage more Malaysians to save for their retirement and prepare for their old age.
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