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Gross vs net salary in Malaysia: what actually lands in your account

Gross salary is the figure in your offer letter; net is what lands in your account. The gap is EPF, SOCSO, EIS and tax. Here's how to work it out.

The kerjaya team··3 min read
RM1,700 gross becomes about RM1,501 net after mandatory deductions

The figure in your offer letter is your gross salary — base pay before any deductions. What actually lands in your account is your net salary, after the mandatory deductions.

The gap can be large. For example, RM1,700 gross becomes about RM1,501 net. Here are the four deductions that make the difference — and one important thing many people don't realise.

The four mandatory deductions

  • EPF (11%) — your retirement savings. This is the largest deduction, but it isn't money lost — it goes into your own EPF account. Your employer adds another 13% on top.
  • PERKESO / SOCSO — insurance if you're injured or disabled through work. The employee rate is about 0.5%, per the salary schedule.
  • EIS — insurance if you lose your job. The employee rate is 0.2%.
  • PCB (income tax) — the monthly tax deduction. For low and middle salaries, this is usually RM0 after reliefs and the rebate — we show why below.

SOCSO and EIS are calculated on PERKESO's banded salary schedule, not a flat percentage. For a salary in the RM1,600 to RM1,700 range, the contribution is worked out on the band's midpoint (RM1,650) — which is why the employee SOCSO is RM8.25 (0.5% × 1,650), not RM8.50.

Example 1: RM1,700 gross

ComponentPer month (RM)
Gross salary1,700.00
Less EPF (11%)−187.00
Less SOCSO (Category 1)−8.25
Less EIS−3.30
Less PCB−0.00
Net salary≈ 1,501.45

No PCB: on RM20,400 a year, after personal relief (RM9,000) and EPF, chargeable income is about RM9,156. The tax on that is only RM41.56 a year — and the RM400 individual rebate wipes it straight out to zero.

Example 2: RM3,000 gross

ComponentPer month (RM)
Gross salary3,000.00
Less EPF (11%)−330.00
Less SOCSO (Category 1)−14.75
Less EIS−5.90
Less PCB−0.00
Net salary≈ 2,649.35

kerjaya calculation. SOCSO and EIS use the RM3,000 band midpoint (RM2,950): 0.5% and 0.2%. Rate sources: PERKESO, EPF.

Notice: tax is still RM0 at RM3,000 a month. Chargeable income (RM36,000 − RM9,000 − EPF RM3,960 = RM23,040) produces about RM241 of tax a year — but the RM400 individual rebate (for chargeable income below RM35,000) wipes it out. Many people think a RM3,000 salary must be taxed. It isn't — not once the rebate applies.

Gross to net take-home: RM1,700 gross becomes about RM1,501 net, and RM3,000 gross becomes about RM2,649 net
The gap is EPF, SOCSO and EIS — tax is still RM0 at both these salaries after the RM400 rebate.

When tax starts being deducted

The RM400 rebate is only for chargeable income of RM35,000 or below. Once your chargeable income passes that level, the rebate disappears and tax starts being deducted for real. For a single person with no other reliefs, that's roughly from a gross salary of around RM5,000 a month upward — depending on the reliefs you claim (medical, education, dependants, and so on).

Want to work out a civil servant's gross salary with allowances? Use our government salary calculator. For the minimum wage specifically, see minimum wage in Malaysia.

What we don't know

  • Optional deductions such as zakat, PTPTN instalments, cooperative contributions or extra savings vary by individual — we don't include them. The examples above are mandatory deductions only.
  • Monthly tax deduction (MTD/PCB) sometimes deducts a little each month that is later refunded at e-Filing. The "RM0 tax" figure above is the actual annual tax after the rebate.
  • Your tax reliefs may differ from our assumptions (we use personal relief of RM9,000 and EPF only). More reliefs mean lower tax.
  • The net salary for non-citizen workers is different — their EPF and tax rates differ.

Common questions

What is the difference between gross and net salary?
Gross salary is the figure in your offer letter — base pay before deductions. Net salary is what actually lands in your account, after the mandatory deductions for EPF, SOCSO, EIS and tax.
How do you work out net salary from gross?
Subtract four mandatory deductions from gross: EPF 11%, SOCSO (about 0.5%), EIS (0.2%), and PCB (tax). Example: RM1,700 gross becomes about RM1,501 net; RM3,000 gross becomes about RM2,649.
Is a RM3,000 salary taxed in Malaysia?
No. At RM3,000 a month, tax is still RM0 after personal relief and the RM400 individual rebate (for chargeable income below RM35,000). Many think a RM3,000 salary must be taxed — it isn't, once the rebate applies.
When does tax start being deducted?
Tax starts being deducted once your chargeable income passes RM35,000 a year, when the RM400 rebate disappears. For a single person with no other reliefs, that's roughly from a gross salary of around RM5,000 a month upward.

Where these numbers come from

Every figure on this page is traceable to a primary source. If we could not verify something, we say so.

  1. EPF — mandatory contribution rate (employee 11%)Employees Provident Fundhttps://www.kwsp.gov.my/en/employer/responsibilities/mandatory-contribution
  2. PERKESO — Contribution Schedule Act 4 (SOCSO) & Act 800 (EIS)Social Security Organisation, Category 1 contribution rateshttps://www.perkeso.gov.my/images/dokumen/Kadar_Caruman_AKTA_4.pdf
  3. LHDN — individual tax rates & RM400 rebate (chargeable income ≤ RM35,000)Inland Revenue Board of Malaysiahttps://www.hasil.gov.my/individu/kitaran-cukai-individu/lapor-pendapatan/rebat/

How these numbers were checked

Written and checked by The kerjaya team. Last checked against official sources: .

The key figures in this article were checked against EPF — mandatory contribution rate (employee 11%) and PERKESO — Contribution Schedule Act 4 (SOCSO) & Act 800 (EIS) and 1 other official sources.

How we choose, check and update our numbers →

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