LHDN: No penalty for CP500 non-payment in 2026

Individual taxpayers receiving CP500 instalment notices will face no penalties for non-payment in 2026, as LHDN implements a transition period for compliance.

CYBERJAYA: Individual taxpayers who receive the Instalment Payment Notice (CP500) will not have penalties imposed in 2026, the Inland Revenue Board (LHDN) said.

The board said the government has agreed to a transition period for individual taxpayers with incomes from salaries and non-salaries, such as rent, interest and royalties, for CP500 compliance for the assessment year 2026.

“In the transition period, no penalty will be imposed if taxpayers do not pay the CP500 instalments but they are encouraged to make voluntary payments to help reduce their tax payments when filing their income tax return forms,” LHDN said in a statement.

It added there was no need for taxpayers who only have incomes from salaries to comply with the instalment payment instructions.

They are, however, advised to update reporting on income receipt in their tax returns for the 2025 assessment year to avoid receiving CP500 notices in the future.

Taxpayers who wish to make amendments to their CP500 amounts using the CP502 form can submit their first amendment no later than June 30.

A second amendment can be submitted no later than Oct 31.

“LHDN recommends taxpayers to report their incomes in their tax return forms accurately and truthfully to ensure a more efficient and organised tax management,” it said.

The board added it will contact taxpayers involved to explain any errors in income reporting in tax returns submitted previously.

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