The Four Deductions on Every Malaysian Payslip
When your employer processes payroll in Malaysia, four statutory deductions are removed from your gross salary before the remainder is transferred to your bank account:
- EPF (KWSP) — Employees Provident Fund: retirement savings
- SOCSO (PERKESO) — Social Security Organisation: workplace injury insurance
- EIS (SIP) — Employment Insurance System: retrenchment protection
- PCB / MTD — Potongan Cukai Berjadual: monthly income tax withholding
1. EPF Deduction (11%)
The employee EPF contribution rate is 11% of gross salary. This is fixed for most employees earning above RM5,000/month. For salaries below RM5,000, the government periodically allows a reduced rate (e.g., 9% during the COVID-19 stimulus period), so always check the current rate at kwsp.gov.my.
Your employer also contributes 13% (if your salary is RM5,000 or below) or 12% (above RM5,000) on top of your salary — this does not reduce your take-home pay but goes directly into your EPF account.
2. SOCSO Deduction
SOCSO contributions use a tiered table based on salary band. For an employee earning RM5,000/month, the employee’s contribution is RM29.75/month. SOCSO is only applicable for employees earning RM5,000/month or below.
3. EIS Deduction
EIS was introduced in 2018 under the Employment Insurance System Act. The rate is 0.2% of gross salary for the employee (and 0.2% matched by the employer). For a RM5,000 salary, this works out to roughly RM9.75/month based on the EIS contribution table.
4. PCB / MTD (Income Tax Withholding)
PCB (Potongan Cukai Berjadual) is the monthly income tax that your employer deducts and remits to LHDN. The amount varies depending on:
- Your annual salary (monthly × 12)
- Marital status and number of children
- TP1 declaration — if you declare reliefs (e.g., life insurance, medical) to your employer via TP1 form, your PCB is reduced
- Zakat payments made directly can replace PCB ringgit-for-ringgit
Worked Example: RM5,000 Gross Salary
Here is a step-by-step breakdown for a single employee with no TP1 declaration:
| Item | Amount (RM) | Note |
|---|---|---|
| Gross Salary | RM 5,000.00 | Before any deductions |
| EPF (Employee 11%) | − RM 550.00 | 5,000 × 11% |
| SOCSO (Employee) | − RM 29.75 | RM5,000 salary band |
| EIS (Employee) | − RM 9.75 | RM5,000 salary band |
| PCB (Income Tax) | − RM 80.00 | Single, no reliefs (approx.) |
| Net Take-Home Pay | RM 4,330.50 |
So on a gross salary of RM5,000, you take home approximately RM4,330 after all statutory deductions. The exact PCB amount varies significantly with marital status and declared reliefs.
How to Reduce Your Deductions Legally
- Submit a TP1 form to your employer declaring life insurance premiums, medical insurance, or education expenses. This lowers your PCB each month rather than waiting for a tax refund at year-end.
- Pay Zakat — Zakat payments are a 1-for-1 rebate against PCB for Muslim employees. Every RM you pay in Zakat reduces your PCB by RM1.
- Elect the 9% EPF rate if you prefer higher monthly cash flow (at the cost of lower retirement savings).
Calculate Your Exact Take-Home Pay
Enter your salary to instantly see EPF, SOCSO, EIS, and PCB deductions, employer contributions, and your net pay.
Related Guides and Calculators
- Salary Calculator Malaysia — instant net pay breakdown
- PCB Calculator Malaysia — estimate your monthly tax deduction
- EPF Calculator Malaysia — project your retirement savings
- PCB vs Income Tax — What’s the Difference?