Self-Assessment System:

SAS is related to the process through which taxpayers have to determine the taxable

income, computation of the tax liability and submitting their tax returns which are usually

created by the tax laws, policy statements and rules stated by the tax authorities.

Nations, for example, Sri Lanka (1972), Pakistan (1979), Indonesia (1984), Australia

(1986-1987), New Zealand (1988) and the United Kingdom (1996-1997) are countries

that had used the self-assessment System. Wong (1999), expressed that SAS was

practiced cause of the following reasons:

1. For the encouragement of the taxpayers to stand by the taxation willingly.

2. Using cost and resources related to tax administrators efficiently.

3. For making the improvement in the tax collection and also making an increment

in this

In Malaysia, the assessment framework is practiced for accomplish three primary

targets which are to lessen tax gathering expenses, to rush tax accumulation and

diminish uncollectable taxes, and to expand the rate of citizens performing their tax

responsibilities.

SAS indicates to an evaluation technique focused on the assumption techniques that all

data reported by the citizen who paying tax is right and required not be checked by the

Inland Revenue officers. A SAS, then on the other hand, introduces to a framework

whereby the tax paying citizen must be more dependable in guaranteeing that the right

data is given in the form of Income Tax and the Inland Revenue accepts it in full trust

that the substance is right and genuine. The structure is unquestionably acknowledged

by the Inland Revenue unless when there is uncertainty as to the validness of the data

given.

Making Self-Assessment System Understandable:

To make understand SAS, we have to see the underlying variables of the framework or

the system. Essentially, the conclusion to a self-assessment system comprises of two

essential preconditions where the form of the assessment got by the Chief Director is

subjected to serious post-assessment exercises. These exercises incorporate, inter alia,

post-assessment checks and auditing action

The two preconditions are alluded to as the essential and auxiliary function by Barr et al.

(1997). As indicated by Barr et al., essential function is a citizen's obligation. It is the

coherent base for pay charge (income tax) operations, for example, computation of

aggregate wage, tax exclusion salary, assessable pay furthermore assessments to be

paid.

The secondary function executed by the Inland Revenue officers is more slanted

towards checking, furthermore checking the income tax forms. This is known as tax

auditing. Conversely, this function is definitely not the fundamental operation inside the

Inland Revenue, yet it is vital to support the essential function. The function is singularly

performed by the Inland Revenue.

SAS is actually relied on tax paying citizens intentionally meeting their tax

responsibilities. In this case, a positive recognition is crucial. At the point when creating

methodologies and tax arranging, duty managers can't disregard the recognitions and

responses of the taxpayers. This is because of their perceptions of a specific taxation

strategy will influence their tax behavior to meet the outlined strategy. The same

articulation was likewise plot by Mustafa (1999). As indicated by him, tax paying

citizens' perception towards the formal assessment system and SAS are critical

components for policy producers. A recently presented system can just work easily at

the point when the citizens have a positive perception towards the system.

The achievement of SAS is affected by tax paying citizens' state of mind and their trust

on the framework itself. Henceforth, the certainty of citizens on a specific system relates

essentially to the tax paying citizens' state of mind towards it. Consequently, the main

aim of this study is to look into SAS and also view of tax paying citizens towards the

assessment system.

Individual Self-Assessment System:

The Self-assessment system for people incorporating salaried people and sole

proprietors and for partnerships was actualized with impact from Y/A 2004 after the

arrival of the Income Tax (Revision) Act 2002. Under SAS which is focused around the

idea related to “Pay” and “File”, people are obliged to:

File:

This include their finished pay assessment (income tax) form structures to the IRB

together with the compensation of the equalization of tax payable (if any).

Pay:

This include their wage tax liability through month to month pay deductions for salaried

people or through bimonthly payment for people having income through business.

For people other than salaried people, the IRB may issue an endorsed form (Form CP

500) setting out the Estimate of Tax payable (ETP) under a portion plan. ETP is

controlled by the IRB based on the tax assessed in the former year. The tax paying

citizen is obliged to pay the ETP in six bi-month to month portions as steered by the IRB

initiating from the month of March. Every portion installment joined by a settlement slip

(Form CP 501) must be paid to the IRB inside 30 days from the due date.

For salaried people, salary tax will keep on being deducted through the month to month

salary deduction basis under the Monthly Tax Deduction (MTD) plan.

Penalty provisions:

(a) Making Late payment

When any installment due and payable on the date defined by the IRB has not been

paid in the 30 days from the due date, a punishment of 10% shall be obligatory on the

sum unpaid without any further perceive.

(b) Difference between the revised gauges submitted and final tax obligation

At the point when the tax payable barring tax attributable to service salary, if any,

surpasses the updated gauge (if an amendment is submitted) by a sum surpassing 30%

of the duty payable, the amount surpassing the 30% will be liable to a punishment of

10% under the Monthly Tax Deduction (MTD) plan.

Corporate Self-Assessment System:

Under the SAS, each organization is obliged to determine and submit in endorsed

(Form Cp204) an assessment of its tax payable for a year of appraisal, 30 days prior to

the start of the premise period. Nonetheless, when an organization first begins

operations, the assessment of tax payable must be submitted to the IRB inside three

months from the date of beginning of its business and from that point no later than 30

prior days the start of the premise period.

With impact from Y/A 2002 and resulting years, the appraisal of assessment payable for

that year can't be lower than the most recent reconsidered appraisal submitted for the

immediate preceding year of assessment, or on the off chance that no revision was

submitted, the first assessment gauge for the immediate preceding year.

With impact from Y/A 2011, where an organization first starts operations in a year of

appraisal and the premise period for that year of appraisal is not more than six months,

that organization is most certainly not needed to furnish an evaluation of assessment

payable or make installments for that year of appraisal.

Penalty provisions:

(a) Failure to furnish appraisal of tax obligation

Under S. 120(1)(f) of the ITA 1967, any organization which, without sensible reason

neglects to submit the assessment of tax payable for a year of appraisal should be

liable of an offense and upon conviction, be at risk to a penalty going from RM 200 to

RM 2,000 or face detainment for a term not surpassing six months or both.

With impact from Y/A 2011, where no arraignment is founded by the Director General

and no direction is issued by the Director General under S. 107c(8) of the ITA 1967; yet

there is a tax payable by the firm for the current year of taxation for which that sum of

tax payable will be impose to a punishment of 10%.

(b) Making Late payment

As clarified earlier, regularly scheduled installments ought to be dispatched to the IRB

by the due dates, i.e. by the "10th" day of the accompanying month. Failure to dispatch

the installments on a convenient premise will bring about a programmed punishment of

10% being forced on the unpaid sum.

(c) Difference between the appraisals submitted and final tax obligation

At the point when the tax payable for a specific year of evaluation surpasses the first or

the revised gauge (if an update is submitted) by a sum surpassing 30% of the tax

payable, the difference will be liable to a punishment of 10%.