PETALING JAYA: Individual taxpayers who have received Instalment Payment Notices (CP500) will not be subjected to penalties in 2026, says the Inland Revenue Board (LHDN).
The government body said this was to give individual taxpayers with income from employment and non-employment sources, such as rental income, interest, and royalties, time to comply with CP500 requirements for the 2026 Assessment Year (AY).
“Taxpayers are still encouraged to make voluntary CP500 payments to help reduce their outstanding tax liability when filing the Income Tax Return (ITR) later,” the board said in a statement on Monday (Jan 5).
It added that taxpayers with only employment income are not required to comply with the instalment payment directive. However, they are still advised to update their income reporting in the ITR for AY 2025 to avoid receiving CP500 instalment notices in the future.
“We will also contact affected taxpayers to clarify any income reporting errors in previously submitted ITRs,” it added.
For taxpayers seeking to revise their CP500 instalment amounts via Form CP502, LHDN said that any first revisions must be submitted by June 30, 2026, and any second revisions by Oct 31, 2026.
“LHDN encourages taxpayers to accurately and correctly report their income in the ITR to ensure more efficient and orderly tax management,” LHDN said.
On Jan 5, Prime Minister Datuk Seri Anwar Ibrahim announced a penalty-free period throughout 2026 for unintentional errors in taxpayers' CP500 filings.
