SINGAPORE – The goods and services tax (GST) rate will be raised from 8 per cent to 9 per cent on Jan 1, 2024.
Some transactions might span the GST rate change – for example, when consumers are issued invoices, make payment, and receive goods and services fully or partly in the new year.
The Straits Times examines various scenarios.
Q: I place an order for a fridge and receive the invoice on Dec 29, but the supplier delivers the fridge to me on Jan 3.
A: If you make full payment on Jan 3 after receiving the fridge, the supplier is required to charge you 9 per cent GST even though the invoice received in December would reflect the rate at 8 per cent.
The supplier may collect the additional 1 per cent GST from you – for example, by issuing an additional invoice. However, he can also choose to absorb the additional GST.
If you make full payment for the fridge in December before receiving the item, GST will be charged at 8 per cent.
You should also know that businesses – with the exception of hotels and food and beverage establishments that impose a service charge – are required to include GST in their price displays.
Q: On Dec 15, I book three sessions of air-con servicing and receive the invoice for all the sessions on the same day. The air-con servicing will be performed in December, and March and July 2024.
A: If you make full payment for the three sessions in January, you will need to pay an additional 1 per cent in GST for the two sessions taking place in the new year. This comes even as the rate is reflected as 8 per cent on the invoice that was issued to you in December.
Your supplier may issue another invoice or choose to absorb the additional GST.
GST will still be charged at 8 per cent for the session in December.
If you make full payment in December for all three sessions, GST will be charged at 8 per cent even though the services are performed on or after Jan 1.
Q: I book a table at a restaurant for a Feb 10 Chinese New Year dinner for $1,000, excluding GST. I put down a deposit of $200 to confirm the booking, and will pay the remaining $800 after the dinner.
A: GST will be charged at 8 per cent on the $200 deposit paid before Jan 1 and 9 per cent on the balance payment of $800.
Q: On Dec 20, I buy a vacuum cleaner and opt for a 10-month interest-free instalment payment plan. I pay the first instalment in December, and the supplier delivers the vacuum cleaner to me on Jan 3.
A: If the instalment plan is arranged directly with the supplier, GST will be charged at 8 per cent on the first instalment paid in 2023, and 9 per cent on the subsequent instalments paid in the new year.
But if the plan is arranged with your bank via credit card payments, the supplier will receive the full payment from the bank upfront once it is charged to your card. If the full payment is charged to your card by Dec 31, you will pay 8 per cent GST on the entire amount even though you may be paying instalments only in 2024.
Q: On Dec 10, I pay for a one-day training course and receive the invoice. It is valued at $1,000, excluding GST, and scheduled to take place on Dec 28. On Dec 26, I decide to change to another course that is valued at $1,200 and scheduled for Jan 20. I pay the difference on Jan 2.
A: The service provider might choose to use your previous payment to offset the fees for the new course. In this case, GST remains at 8 per cent on the $1,000 paid on Dec 10.
You will pay GST at 9 per cent on the additional $200 fee.
If the full payment of $1,000 is credited to your account with the service provider, and you use it to pay for the new training course in January, you will incur 9 per cent GST on the full course fee of $1,200.
Q: I purchase a jacket and a handbag online from two different GST-registered overseas sellers on Dec 23. The jacket costs less than $400, while the handbag costs over $400. The items are separately imported by air into Singapore on Jan 5.
A: GST has been chargeable on sales of low-value goods – those valued up to $400 and imported via air or post– by GST-registered overseas sellers since Jan 1, 2023.
You will pay 8 per cent GST for the jacket since it was purchased in 2023.
The handbag is not a low-value item so GST will not be charged at the point of sale. But you will need to pay import GST of 8 per cent for such goods imported in 2023 and 9 per cent if they are brought in on or after Jan 1.
You will therefore pay 9 per cent GST to Singapore Customs for the handbag. This might be collected by the overseas seller from you in advance.
Q: My condominium’s managing agent bills me for the maintenance fee every quarter. On Nov 1, I receive an invoice for quarterly maintenance services from December 2023 to February 2024, with payment due by Dec 15. On Dec 15, I pay the managing agent for one year of maintenance services from December 2023 to November 2024. However, the agent has not issued invoices for the period after February and treats the excess payment as a credit balance in my account to offset my future maintenance fees.
A: GST is chargeable at 8 per cent on maintenance fees from December to February, and 9 per cent on fees from March to November since the invoice has not been issued. This means that you will need to top up for the additional 1 per cent GST.
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This article was first published in The Straits Times. Permission required for reproduction.