What is meant by the "Schedular Tax Deduction" (STD)?

The Schedular Tax Deduction (STD) is a collection scheme whereby it is obligatory for each employer to deduct from the salary of each of his employee following a schedule as determined by LHDN for payment of income tax of the employees. The sample of the schedule is attached as Appendix I. Presently, there are 3 categories of employees who are subject to STD:

(i) Employees who commenced employment before 1 January 1995;
(ii) Employees who commenced employment after 1 January 1995; and
(iii) Employees in Sabah and Sarawak.

(i) Category (i)
For employees commencing employment prior to 1 January 1995, tax deduction is in respect of income derived from the preceding year.

(ii) Category (ii) and (iii)
For employees commencing employment after 1 January 1995 and employees in Sabah and Sarawak, tax deduction is for the income derived in the current year.

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