Breach of contract - employer asking 2 months pay

If this condition is stated in your employment contract you may have to pay unless you're prepared to take on the services of a litigation lawyer. The tax situation is something you should have known before coming to Malaysia and I think isn't really the employers fault. Quitting a company after a week is maybe good for you but if the employer has spent money and time to employ you and arranged your visa/work permit, then it isn't very good for them to simply allow you to leave within the 12 months contract and incur a loss. As an employer I would be really angry. At the very least I'd expect you to refund any money they have spent on employing you to date.

Having said that, if you have your passport then you could simply fly back to India on the next available flight, but expect to be blacklisted from working in Malaysia. Not knowing how much tax you will pay is no excuse in my opinion.

Its 28% and after 182 days you become tax residence and the tax is lower..Malaysia is one of the lowest tax country ..should have thought about it before you resigned. If you breach contract employer can ask for the mo ey back