Income Exemptions: Schedule 6 and Tax Orders

# Income Exemptions: Schedule 6 and Tax Orders

Some income is exempt from tax under Schedule 6 of ACP 1967 or Orders of the Minister of Finance. This article explains the core paragraphs, the scope of the exemptions and the conditions attached to them.

Updated: 8 November 2026 — Independently fact-checked.

Review date: 8 November 2026
Year of assessment: All YA (provisions of Schedule 6 ACP 1967); annual gazette orders subject to review
Status: Published

What is Schedule 6?

Schedule 6 of the Income Tax Act 1967 (ITA) lists income that is exempt from tax. It differs from relief, which reduces chargeable income — an exemption means the income is not counted at all.

Core paragraphs confirmed in this review

Paragraph 12B — single-tier dividends: single-tier dividends are not taxed in the hands of shareholders other than individuals (see the Dividends and Dividend Tax guide).
Paragraph 28 — foreign income: previously exempted foreign income received in Malaysia by residents (with exceptions for banking/insurance/shipping businesses); Finance Act 2021 narrowed it from 1 January 2022; the exemption is now granted through orders: P.U.(A) 96/2022, P.U.(A) 234/2022 (individuals), P.U.(A) 235/2022 (foreign dividends of companies/PLT); P.U.(A) 451/2024 (extension for individuals until 31 December 2036) (this matter still awaits official confirmation; re-check with official sources before making decisions).
Paragraph 33B — sukuk interest: exemption for sukuk (SPV) interest — consistent with s.60I and the HASiL withholding tax page.

Exemption orders (s.127(3)(b))

The Minister of Finance may exempt income through an Order under paragraph 127(3)(b) ACP. Examples: P.U.(A) 117/2025 amends P.U.(A) 57/2002 (adding item 17 — integrated circuit design services) effective from YA 2025; P.U.(A) 451/2024 (FSI individuals); P.U.(A) 270/2026 and 275/2026 (unit trust funds and companies/PLT/trusts/cooperatives — capital assets; effective 1 January 2027) (this matter still awaits official confirmation; re-check with official sources before making decisions).

Warning: exemptions are subject to conditions

Schedule 6 exemptions are often subject to conditions (e.g. recipient category, type of source, gazette order) — do not generalise without the conditions. State the YA and the order number for each example.

Figures & facts not yet confirmed

The full list of Schedule 6 paragraphs and the conditions of each paragraph (the full text is the Act; the article only lists the paragraphs confirmed in this review).
The numbers and gazette dates of P.U.(A) 270/2026, 275/2026 and 451/2024 — verify against the AGC Gazette before publication.
Rates/amounts related to specific exemptions (e.g. pensions/scholarships) — not verified in this review; do not invent figures.
Changes after 2026 (Budget 2027 — proposals in Parliament; verify the enactment status).