What transaction types are exempt from Malaysian LHDN e-invoicing under Section 1.6?
Section 1.6 of the LHDN e-Invoice Guidelines permanently exempts specific income and expense types from the e-invoice generation requirement. Permanently exempt categories include employment income, pensions, alimony, zakat, scholarships, and specific dividend distributions. A July 2024 update additionally exempted the contract value for buying and selling of securities or derivatives traded on an exchange, and disposal of unlisted shares under certain conditions.
What are the permanently exempt income types under Section 1.6?
The following income and expense types are permanently exempt from LHDN e-invoice generation: employment income (salaries, wages, benefits-in-kind paid to employees); pensions received by retired individuals; alimony and maintenance payments; zakat contributions to Islamic religious bodies; scholarships and educational grants; and specific distributions of dividends under conditions specified in the guidelines. These exemptions reflect the policy judgment that such payments are not commercial transactions between business entities and therefore fall outside the e-invoicing regime's intended scope.
What financial instrument transactions were exempted in July 2024?
A July 2024 update to the LHDN e-Invoice Guidelines extended Section 1.6 exemptions to cover the contract value for the buying and selling of securities or derivatives traded on a recognized exchange, and the disposal of unlisted shares under certain specified conditions. These exemptions were added to prevent the e-invoicing mandate from disrupting established capital markets settlement practices, where the contract note—not an e-invoice—is the standard transaction document.
Frequently Asked Questions
- If a transaction type is listed in Section 1.6, does the business need to apply for an exemption?
- No. Section 1.6 exemptions apply automatically by category; businesses do not need to apply to LHDN for individual transaction exemptions. However, businesses should document their basis for applying a Section 1.6 exemption to each transaction type in case of LHDN audit, as the exemption applies only to the specific categories listed.
- Are B2C sales to individual consumers exempt under Section 1.6?
- B2C transactions are within scope for businesses that have crossed the relevant revenue threshold mandating e-invoicing. However, LHDN permits a consolidated e-invoice approach for B2C transactions—where a single periodic consolidated e-invoice can cover all retail transactions rather than individual per-consumer e-invoices. This is a separate accommodation from the Section 1.6 exemptions, which cover specific income types rather than transaction party configurations.
Related Concepts
- What is Malaysia's LHDN 72-hour e-invoice cancellation and rejection window?
- What are the LHDN Unique Identification Number (UIN) and cryptographic QR code?
- What are Malaysia's self-billing e-invoice requirements for foreign supplier transactions?
- What is the difference between the LHDN API and the MyInvois Portal for e-invoice submission?
- What is Section 134A of the Income Tax Act 1967 and how does it underpin Malaysian e-invoicing?