4 Types of GST Supply: Understanding Taxable and Non-Taxable Supplies in Singapore

Goods and Services Tax (GST) is an essential part of Singapore’s tax system, levied on the consumption of goods and services. Having a basic understanding of the different types of supplies under GST is crucial for businesses to ensure compliance with tax regulations. In Singapore, supplies are categorized into taxable supplies and non-taxable supplies, and these classifications determine whether GST should be applied to a particular transaction.

GST-registered business

Business owners may want to be informed that GST registration is mandatory (compulsory registration) if your taxable annual turnover reaches S$1 million in turnover. However, GST registration is also required if you reasonably foresee that the taxable turnover is expected to exceed S$1 million in the next 12 months.

Alternatively, voluntary registration is also allowed should business owners wish to. There are incentives for voluntary registration, which we will not discuss in detail.

Concept of Supply - Types of GST Supply

In general, the definition of supply for GST covers all forms of supply where goods and services are provided in return for a consideration. Under the GST Act, 2014 (GST Act), supply means all forms of supply, including the supply of imported services done for a consideration, and anything that is not a supply of goods but is done for a consideration is a supply of services.

Taxable Supplies

A taxable supply refers to goods or services that are subject to GST. These supplies can either be standard-rated or zero-rated, depending on the nature of the supply.

1. Standard-Rated Supplies

Standard-rated supplies are those that are subject to GST at the prevailing rate. The GST rate was 7% until December 31, 2022. The GST tax rate adjustment was implemented in two phases. The first adjustment was from 7% to 8% beginning January 1, 2023. The current GST rate of 9% applies from January 1, 2024 onward. Charging the correct GST rate during this phase of transition is crucial. The standard rated supplies is the most common type of supply for businesses in Singapore.

Examples of standard-rated supplies include:

• Sale of goods, such as clothing, electronics, or furniture

• Provision of services, such as accounting, consulting, or marketing services

  
  

For a supply to be considered standard-rated, both the supplier and the recipient must be in Singapore, and the supply must not fall under the exemptions or zero-rating provisions.

If your business makes taxable supplies of goods or services at the standard rate, you must charge GST on the value of the supply. This GST is remitted to the Inland Revenue Authority of Singapore (IRAS).

2. Zero-Rated GST Supplies (Nil-rated supplies)

Zero-rated supplies are also taxable supplies but are subject to a 0% rate of GST. Even though no GST is charged on the sale of these goods or services, businesses making zero-rated supplies are still allowed to claim back any input tax incurred on their purchases related to these supplies.

Zero-rated supplies typically include exports and certain international transactions.

Examples of zero-rated supplies include:

• Export of goods from Singapore to another country

• International services, such as shipping or air transportation services

• Supplies of investment-grade precious metals (such as gold and silver) in certain circumstances

For businesses dealing with zero-rated supplies, it is essential to maintain accurate records and fulfill all the requirements set out by IRAS to ensure that the zero-rating applies appropriately.

Non-Taxable Supplies

Non-taxable supplies do not attract GST. These can be further divided into exempt supplies and out-of-scope supplies.

3. Exempt Supplies

Exempt supplies refer to goods or services that are excluded from the GST system altogether. No GST is charged on the sale of exempt goods or services. However, businesses making exempt supplies cannot claim input tax credits for GST paid on their purchases related to exempt supplies.

Examples of exempt supplies include:

• Financial services, such as insurance or banking services

• Residential property transactions, including the sale or rental of residential property

• Educational services, such as tuition or vocational courses

• Certain healthcare services, like medical treatments and services by licensed medical practitioners

Businesses providing exempt supplies may face a challenge in recovering input tax, as they cannot claim back GST on the purchases they make for their business operations.

4. Out-of-Scope Supplies

Out-of-scope supplies refer to supplies that are not subject to GST because they fall outside the scope of Singapore’s GST legislation. These are typically transactions that do not involve the supply of goods or services within Singapore, such as:

Examples of out-of-scope supplies include:

• Supplies made outside of Singapore

• Supplies made by entities that are not registered for GST

• Transactions that do not involve a supply of services or goods, such as the mere transfer of ownership of an asset with no consideration (e.g., a gift)

If a supply is out of scope, it is not subject to GST at all, and there is no requirement to charge GST on such a supply.

GST Return filing

A comprehensive process of filing GST Tax returns is a good business compliance practice. A GST-registered business should maintain a clear record of GST transactions and individual supplies. The classification of supply directly affects the GST returns, and hence, companies should be familiar with the key concepts of supplies. Accuracy should be prioritised for input tax claimable and output tax payable. Documentation such as tax invoices should be maintained to ensure compliance during possible checks from the Inland Revenue Authority of Singapore (IRAS).

The filing periods for GST tax returns are submitted on a quarterly basis. It is 1 month after the quarter end of your accounting period.  

Conclusion

Filing of GST returns is an obligation for all GST-registered companies. In summary, understanding the different types of supplies under GST is fundamental for businesses to remain compliant with tax regulations. Businesses in Singapore need to differentiate between taxable supplies (either standard-rated or zero-rated) and non-taxable supplies (exempt and out-of-scope). By understanding these distinctions, companies can ensure they charge the correct amount of GST, file an accurate GST return, claim appropriate input tax credits, and comply with IRAS requirements.

For further guidance and to ensure business compliance with GST regulations, businesses are encouraged to refer to the official guidelines provided by IRAS, which can be found on their website here.

If you're unsure about how GST applies to your business or need assistance to file returns, it is advisable to consult a professional.

At OakTree Accounting and Corporate Solutions, we assist clients in preparing GST schedules and filing GST returns. We also help businesses with the GST registration process should you require it. Do contact us if you need more information on GST matters.

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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.

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