Goods and service tax (GST) is an indirect tax in Singapore on the supply of goods and services, ultimately borne by the final consumers. Businesses collect this tax from the government, offset the GST Input Tax, which is the amount businesses have paid on the purchase/expenses incurred for their businesses, and then remit the difference to the government.
However, the Inland Revenue Authority of Singapore (IRAS) guidelines complicate claiming the GST input tax paid by the taxpayer on purchases.
This guide explains everything you need to know about GST input tax in Singapore, the steps to claim GST Input Tax Credit (ITC), determine the eligible expenses to file accurate claims, understand the credit rules, and much more.
Input tax is one of the major components of GST. It is the tax a business pays when purchasing goods/services for its business or incurring business-related expenses. Here are the key details:
For instance, if a retailer buys a smartphone for SGD 545 (including SGD 45 GST) for further supply to the end consumers, they can claim back SGD 45 as input tax, reducing their net GST liability.
Output tax refers to the GST a business charges its customers to sell goods or services. This amount is collected from the customers at the point of sale and paid to the government later.
For example, a retailer sells a smartphone for SGD 1,090 inclusive of 9% GST. This SGD 90 is collected by the retailer from the customer, and the retailer is liable to pay the same to IRAS as output tax.
If the retailer's total output tax for a period is SGD 90 and the input tax claimable is SGD 45, the net GST payable to IRAS is:
Net GST Payable = Output Tax – Input Tax = 90 – 45 = SGD 45.
To claim GST input tax in Singapore, businesses must submit the input tax details in the form GST-F5. Businesses must file the GST F5 Return through myTax Portal. You must declare the total value of taxable supplies and the output tax in this form.
Remember:
The input tax has to be claimed withing 5 years and in the right accounting period to ensure proper compliance. Businesses can claim input tax in the accounting period as of their tax invoice or import permit.
Alternatively, you may claim input tax based on the date you record or process the tax invoice or import permit in your accounting system, provided that:
When businesses purchase goods or services or import them for business operations, they can claim a GST refund on them, known as Input Tax Credit. However, in order to claim this credit return, businesses need to comply with the underlying conditions, as laid out by the IRAS.
The De Minimis Rule determines whether businesses can claim input tax on exempt supplies. It applies only if the exempt supplies meet these conditions:
When the Rule is Met
If your exempt supplies fall within these limits, you can claim input tax on them. However, this claim is provisional and may require adjustments after the accounting period.
If the Rule is Not Met
When the exempt supplies exceed the limits, GST input tax directly related to them cannot be claimed. Instead, an apportionment formula determines how much of the residual input tax is claimable.
Formula
Exclusions from the Calculation
Some supplies do not count toward the De Minimis Rule, including customer accounting, imported services, reverse charge low-value goods, and certain other supplies.
Not all business expenses are eligible for GST input tax claims. Therefore, it’s essential to understand what qualifies the eligibility criteria. Here are a few examples of expenses that are eligible:
Under Regulations 26 and 27 of the GST (General) Regulations, GST paid on the following expenses are not claimable as GST input tax:
Staff Family Benefits: GST incurred on benefits provided to employee’s family or relatives.
Motor Car Expenses: Expenses incurred in acquiring or operating motor cars, whether registered in the name of the business or in an individual's name, or leased for private or business use. Its exception includes a vehicle that does not meet the criteria of a “motor car” as laid down in Regulation 25(1).
Membership Fees for Clubs: Fees charged for membership (including transferees) in any sports or recreation club.
Costs for the Medical Treatment of Staff Members, Unless:
Employee Insurance Premiums: GST on premiums for accident or medical insurance unless required by the Work Injury Compensation Act or an Industrial Relations Act collective agreement.
Transactions Related to Gambling: Any expenditure regarding betting, sweepstakes, lotteries, fruit machines, or other games of chance.
Certain expenses are often used for both business and personal purposes. Here’s a breakdown of whether you can claim input tax credit on them or not.
Expense | Can You Claim Input Tax? |
Expenses incurred by employees on behalf of the company (e.g., business calls on personal phones) | Yes, if: - The employee is acting as the company’s agent. - You reimburse the employee and record the expense as a business cost. - Business and private expenses are separated (GST on private expenses is not claimable). |
Entertainment expenses | Yes, if: - You have a tax invoice or simplified tax invoice for purchases ≤ $1,000 (including GST). - For expenses > $1,000, you must keep detailed records (e.g., person entertained, purpose, receipts, etc.). - Claims apply only to food and drinks expenses. |
Staff medical expenses | No, unless: - Obligatory under the Work Injury Compensation Act (WICA) or collective agreements. - Mandated by law (e.g., health screenings under Workplace Safety laws). - Related to COVID-19 as per government advisory. |
Medical and accident insurance premiums | No, unless: - Coverage is obligatory under WICA or collective agreements. |
Motor vehicle costs and expenses | Motor cars: No, except for: - Hire-car transport services (e.g., airport transfers from 1 Apr 2022). - Cars used by third parties from 1 Jan 2023 (subject to conditions). - Other vehicles (e.g., vans, lorries): Yes, subject to conditions. |
Gifts and promotional items | Yes, but: - If the cost exceeds $200, you may need to calculate output tax based on the item’s open market value (OMV). |
Club subscription fees | No. |
Use of club facilities | Yes, subject to conditions (e.g., dining, locker rentals, buggy fees) |
Family benefits for staff | No (e.g., school fees for expatriate staff children). |
General insurance for business | Yes, including fire, burglary, and public liability insurance. However, GST on premiums for third-party medical costs must be excluded. |
Overseas purchases (GST/VAT) | No. GST/VAT paid to non-Singapore jurisdictions is not claimable. |
Properties purchased by non-legal entities | Yes, if: - Tax invoices are addressed to the bare trustee. - Supporting documents (e.g., trust deeds) prove the purchase is for a non-legal entity. |
There are multiple benefits attached to GST input tax credit with the main one of lowering GST liability. These are listed below:
GST in Singapore is an indirect tax on goods and services, with businesses collecting and offsetting input tax on eligible expenses before remitting the balance to the government. To claim input tax, expenses must meet IRAS conditions and be properly documented. Eligible claims include office supplies, rentals, and professional fees, while motor vehicle costs and certain staff benefits are excluded. Businesses must file claims via the GST F5 Return within the correct accounting period. Following GST rules helps reduce tax liability, improve cash flow, and maintain compliance.