CP500 explained: LHDN instalments, and the 2026 waiver.

What is CP500?

CP500 (LHDN calls it a Notis Bayaran Ansuran, an instalment payment notice) is how LHDN collects tax from people who do not have an employer deducting it every month. A salaried worker pays as they go through PCB, the monthly deduction from a payslip. Someone with business, rental or royalty income has no such deduction, so LHDN asks them to pre-pay in instalments instead. That is CP500.

The amount is an estimate, worked out from your last assessed tax. LHDN posts the notice around February, and it sets out six instalments for the year. So if you paid RM 3,000 in tax last year, your CP500 might ask for roughly RM 500 every two months. It is a forecast, not a final figure. Your real tax is settled later, when you file your Form B.

The instalment schedule

CP500 is six instalments, due every two months, running from March to January of the following year (March, May, July, September, November and January). Each instalment is due by the date printed on your notice. You pay them the normal way, through ByrHASiL, FPX or your bank, using the reference on the notice.

Every ringgit you pay is not lost. It sits as a credit on your LHDN account, and when you file your Form B the following year, your CP500 payments are set off against the tax you actually owe. Pay more than your final tax and the difference comes back as a refund; pay less and you settle the balance at filing. If you are new to all this, our sole proprietor tax guide walks through where CP500 fits.

Your income changed? Revise it with CP502

Here is the part most people miss. The CP500 figure is only LHDN's guess from last year. If your income this year is clearly different, you do not have to just accept it. You revise the estimate with Form CP502, and the normal deadline to do that is 30 June.

If business slowed down, revise the estimate down so you are not pre-paying tax you will not owe, because that money is better in your account than sitting with LHDN for months. If you had a bumper year, revising up is the safe move, because of the under-estimation rule below.

The two penalties, and why 2026 is different

Normally CP500 carries two penalties. Miss an instalment and a 10% late-payment penalty is added to that unpaid amount (Section 107B of the Income Tax Act 1967). Separately, if your final tax turns out to be more than 30% higher than what you estimated, a 10% under-estimation penalty applies, charged on the shortfall beyond that 30% margin. That second one is the trap: lowball your CP502 revision and a big shortfall gets penalised.

For Year of Assessment 2026, both of those are on hold. On 5 January 2026 LHDN, alongside a Budget announcement by the Prime Minister, said individual taxpayers who received a CP500 will not be penalised for YA 2026. It is a grace year to let people adjust to the instalment system. You are still encouraged to pay what you can, because every ringgit paid now is a ringgit less to find when you file, but a slip in 2026 will not trigger the 10%.

CP500 is not e-Ansuran

These two get mixed up constantly, so it is worth being clear. CP500 comes before you file: LHDN estimating this year's tax and asking you to pre-pay it. e-Ansuran comes after: it is for a bill you have already been assessed on and cannot pay in one go. If your CP500 instalment is simply set too high, you do not use e-Ansuran, you revise with CP502. If you have a finished tax bill you cannot afford, that is when e-Ansuran is the right tool.

In a normal year that RM 120 is avoidable simply by revising up with CP502 once you can see the year running better than expected. In 2026 the waiver means it would not be charged at all, but the habit worth keeping is to hold your estimate close to reality.

What to do next

Check the due date on your CP500 notice and pay what you comfortably can, since the payments credit against your final bill anyway. If your income this year looks clearly different from last year, file Form CP502 by 30 June to move the estimate closer to reality. And remember the two are separate jobs: CP500 is the pre-payment now, your Form B the following year is the real filing that settles everything.