MTD Computation

Monthly Tax Deduction (MTD) computation for additional remuneration year 2009 onward:

Remuneration

Remuneration means income in respect of the gains or profits from an employment other than benefits in kind under paragraphs 13(1)(b) and 13(1)(c) of the Act provided that in a case where an irrevocable election is made by an employee under rule 2A, the gains or profits from an employment shall include the benefits in kind under paragraphs 13(1)(b) and 13(1)(c) of the Act.

'Normal remuneration' means monthly fixed remuneration paid to an employee whether the amount is fixed or variable as stated in the employment contract written or otherwise.

'Additional remuneration' means any payment paid to an employee either in one lump sum or periodical or in arrears or non fixed payment or any additional payment to a current month's normal remuneration.

Such additional remuneration includes:

i. overtime allowance
ii. bonus/incentive
iii. arrears of salary or any other arrears paid to an employee
iv. employee's share option scheme (if employee opts for MTD deduction)
v. tax borne by employer
vi. gratuity
vii. compensation for loss of employment
viii. ex-gratia
ix. director's fee (not paid monthly)
x. commissions
xi. allowances (variable amount either paid every month or not )
xii. any other payment in addition to normal remuneration for current month

Types of Remuneration Subject to MTD
Salary Wages Overtime Payment Commission Tips Allowance Bonus / Incentive	Director Fees Perquisite Employee's Share Option Scheme (ESOS) Tax Borne By Employer Gratuity Compensation for Loss of Employment Other Remuneration Related to Employment

Note: Beginning from the year of assessment 2009, director fees or bonus relating to a year which is received in any current year, that remuneration becomes part of remuneration in the current year it is received.

Types of Remuneration Not Subject to MTD

BIK and VOLA are part of remuneration which is not subject to MTD. However, employee may make an irrevocable election to include the BIK and VOLA as part of his remuneration to be subject to MTD by completing a prescribed form and submit to employer. If employer agrees, BIK and VOLA are subjected to MTD.

1. Benefits in Kind (BIK) - BIK is benefits not convertible into money. The benefits are to be treated as gross income from employment under paragraph 13(1)(b) of the Act.

2. Value of Living Accommodation (VOLA) - VOLA is living accommodation provided for an employee by his employer. The value of the benefit is to be treated as gross income from employment under paragraph 13(1)(c) of the Act.

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