Income Tax Act 1967 · Section 103(3)
LHDN late payment penalty: 10%.
Miss the income tax payment deadline in Malaysia and LHDN increases your unpaid balance by 10%. That is the whole penalty. The extra 5% after 60 days that so many Malaysian articles still quote was repealed with effect from 1 January 2020, and below is the exact section of the Act that did it.
The penalty lives in Section 103 of the Income Tax Act 1967. Under subsection (3), any tax you still owe the day after the payment deadline is increased by 10%. It is automatic, there is no warning letter first, and it applies even if you filed your Form BE or Form B on time. Filing and paying are two separate things: you can do one right and still get penalised for the other.
The 10% is charged on the balance, not on the whole bill. If your tax for the year came to RM 12,000 and monthly PCB deductions had already covered RM 9,000, only the RM 3,000 outstanding at the deadline attracts the 10%.
Nothing more is added at 60 days. The balance stops growing under Section 103 once the 10% is on. It does not go away, though. Unpaid tax can still be pursued by LHDN, including through civil recovery or a travel restriction under Section 104, so clearing it early is still the right move.
Worked example · RM 3,000 unpaid tax
So a RM 3,000 balance you leave unpaid costs you an extra RM 300, and it stays at RM 3,300 however long it sits there. If a page tells you the same RM 3,000 becomes RM 3,450, it is quoting a rule that was repealed years ago.
About the "further 5% after 60 days"
This is the part most Malaysian tax articles still get wrong, so it is worth setting out properly. There genuinely used to be a second charge. Section 103(4) of the Income Tax Act 1967 added a further 5% where the balance was still unpaid 60 days after the 10% went on.
That subsection is gone. The Finance Act 2019 (Act 823), section 15(b) amended Section 103 of the principal Act "by deleting subsection (4)". Section 3(4) of the same Act set the commencement: sections 10, 11, 13, 15, 17 and 18 come into operation on 1 January 2020.
So the extra 5% was real for late payments up to 31 December 2019. From 1 January 2020 onwards, the Section 103 late payment penalty is 10% and that is the end of it. LHDN's own current guidance says the same thing: a late payment penalty of 10% is imposed on the balance of tax not paid after 30 April or 15 May (individual, non business) and after 30 June or 15 July (individual, business).
If you are reading a blog post, a forum reply or even an accountant's newsletter that says "10% then another 5%", check its date. Most of that content was written before 2020 and simply never updated, and plenty of newer posts copied it without checking. There is no 15% late payment penalty in Malaysian income tax today.
Late payment is not the same as late filing
Two different penalties, two different sections. Paying late triggers the 10% under Section 103. Submitting your return late is dealt with separately and can cost a lot more, which is covered in the late filing penalty guide. If you have missed both, you are looking at both.
Frequently asked questions
What is the LHDN penalty for paying income tax late?
It is 10% of the tax still unpaid at the payment deadline, under Section 103(3) of the Income Tax Act 1967. It is applied automatically, with no warning letter first, and there is no second penalty after it.
Isn't it 10% plus another 5% after 60 days?
Not any more. The further 5% sat in Section 103(4) of the Income Tax Act 1967, and it was deleted by the Finance Act 2019 (Act 823), section 15(b), in operation from 1 January 2020. Blogs and forum answers still quoting the extra 5% are describing the pre-2020 rule. Since then the late payment penalty is 10% and nothing more.
Is the 10% charged on my whole tax bill or only on the unpaid part?
Only on the balance still unpaid at the deadline. If your tax for the year was RM 12,000, monthly PCB deductions covered RM 9,000, and RM 3,000 was outstanding on the due date, the 10% applies to that RM 3,000, so RM 300.
Does the late payment penalty apply if I filed on time but paid late?
Yes. Filing and paying are two separate obligations. You can submit your Form BE or Form B on time and still be hit with the Section 103 penalty if the balance is not paid by the deadline.
How can I avoid the LHDN late payment penalty?
Know your tax bill early so you can set the cash aside. MyTaxMate works out your liability the moment you log your income and reliefs, and counts down to the payment deadline, so there is no May surprise. You still make the payment yourself through MyTax.
