Budget 2021 : Personal Income Tax 2021 & Tax Relief, Find out how taxpayers can save more tax.
Personal Tax Rates 2021 | Tax Relief 2021 | Income Tax 2021
Budget 2021 is the largest budget in Malaysia’s history, with a total of RM322.5 billion compared to RM297 billion for Budget 2020.
The main objective is to help taxpayers who have lost their jobs due to the current pandemic; the income tax rates 2021 exemption limit for compensation for loss of employment will be increased from RM10,000 to RM20,000 for each full year of service.
For those earning RM50,000 to RM70,000 a year, the Income Tax Rates 2021 / Personal Tax Rates 2021 lower by 1% point.
With the negative impact of the pandemic on the Malaysian market, the Government has consider providing temporary tax breaks to individual taxpayers who have suffered salary reductions or job losses. These could be in the form of tax rebates designed specifically to cater to the impacted individual taxpayers. Even if the individual taxpayers may have been re-employed during the year, the income lost during the months of unemployment would have had a significant financial impact.
Thus, the government has agreed to lower the rate for personal tax rates 2021 / income tax 2021 by one percentage point for those earning taxable wages from RM50,001 to RM70,000 which is expected to benefit 1.4 million taxpayers.
For a period of two assessment years, the income tax 2021 exemption limit for compensation paid upon job loss will be increased from RM10,000 to RM20,000 for every year of service completed to reduce the burden of the people who are affected by the pandemic.
This tax waiver will allow them to recoup and strengthen their internal finances to rebuild their businesses. With tax exemptions, the employees as consumers, will have higher disposable income.
Tax Relief 2021
The government will raise the tax relief 2021 limit on medical treatment for serious illness as well as a full health screening.
For Medical treatment for serious diseases or illness the tax relief 2021 limit will increases from RM 6,000 to RM 8,000 for individual taxpayer, spouse and children whereby for a full health screening, the tax relief will increase from RM 500 to RM 1,000.
Tax Relief for Medical treatment, special needs and carer expenses for parents (Medical condition certified by medical practitioner) will increases from RM 5,000 to RM 8,000.
Tax exemption would also be given to vaccination cost for personal, spouse and children with a limit of RM 1,000.
Small and Medium-sized Enterprise (SME)
The SME sector continues to be the backbone of Malaysia’s economy. The pandemic has forced SMEs to change their business strategies, operations and conduct, as well as to search for new sources and opportunities for business. Whilst SMEs recognize that technology, digital platforms and online trading infrastructure are crucial to survive their challenges, their workforce also needs to be upskilled. During these difficult times, SMEs may also be looking to divest their non-core assets or investments in order to finance their business operations and survive.
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