GST Input Tax in Singapore & How to claim it?

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.

What is GST Input Tax?

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: 

• Input tax can be claimed as a deduction, which reduces the total GST payable to IRAS.
• To qualify, purchases must meet the IRAS input tax conditions, that is, be directly related to business operations.
• Office supplies, equipment, rental costs, and professional services are examples of expenses on which input tax can be claimed.
• Further, input tax cannot be claimed on the following expenses: private use, non-business entertainment, and motor vehicle expenses.

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 and Setting off Input Tax

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. 

How to claim GST Input Tax in Singapore?

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. 

1. Gather all sales invoices, purchase invoices, receipts, and other relevant documents detailing GST collected and paid.
2. Calculate taxes: Determine total output tax (GST collected from sales) and total input tax (GST paid on business-related purchases and expenses)
3. Go to myTax Portal and og in using your CorpPass credentials.
4.  Fill in all 15 boxes of the GST F5 Return form, paying special attention to:
   • Box 1: Total value of standard-rated supplies (excluding GST)
   • Box 5: Total value of taxable purchases (excluding GST)
   • Box 6: Output tax due
   • Box 7: Input tax and refunds claimed
5. :The system automatically calculate Net GST as:Output tax due (Box 6) - Input tax and refunds claimed (Box 7)
6. Double-check all figures for accuracy before submitting the return and submit
7. Make payment (if required)

Remember:

• File the GST F5 Return quarterly (or monthly if approved) within one month after the accounting period ends.
• Submit a "NIL" return even if there were no transactions during the period.
• Keep all supporting documents for at least 5 years.

When to Claim Input Tax Credit? 

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:

• This method is applied consistently across all GST returns.
• You possess the original tax invoices or import permits at the time of claiming input tax.
• You have internal controls in place to prevent double claiming.

Conditions for Claiming GST Input Tax

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. 

• GST-Registered Business: You must be a GST-registered business during the claim period. 
• Supply or Import: The goods or services must have been supplied to or imported by your business.
• Business Purpose: The goods or services must be used in your business for making taxable supplies.
• Valid Documentation: The claims must have supporting documentation, namely, valid tax invoices, simplified tax invoices, or import permits showing you as the importer.
• Attribution of Taxable Supplies: The input tax must be directly attributable to taxable supplies (standard-rated or zero-rated), out-of-scope supplies, or those treated as taxable if made in Singapore.
• Regulatory Compliance: The input tax credits claimed must meet the requirements of Regulations 26 and 27 of the GST (General) Regulations.

Claiming Input Tax Credit on Exempt Supplies

The De Minimis Rule determines whether businesses can claim input tax on exempt supplies. It applies only if the exempt supplies meet these conditions:

• The monthly average of exempt supplies is $40,000 or less, AND
• The value of exempt supplies is 5% or less of total taxable and exempt supplies for that period.

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.

Eligibility to Claim GST Input Tax

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: 

• Purchase of Goods and Services: The goods or services purchased from GST-registered suppliers are purely for use in business operations.
• Imports: GST paid on goods imported for use in business subject to valid import documentation.
• Operational Expenses: All the expenses that are incurred directly in the running of the business, including utilities, rental, office supplies, equipment, etc.
• Manufacturing/Production Costs: Those raw materials, tools, and machinery used to produce goods or services to be sold.
• Professional Fees: GST incurred on legal, accounting, or consulting services necessary for the business.
• Marketing and Advertising: GST paid on campaigns, promotions, or branding efforts to generate revenue.

Expenses not eligible for GST Input Tax Deduction

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: 

• Compulsory under the Work Injury Compensation Act, or
• a collective agreement under the Industrial Relations Act.
• Are health risks arising from the nature of work or work environment (for expenses incurred on or after 1 October 2021).
• Are for COVID-19 treatment under advisories issued by the Government.

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.

Claiming Input Tax Credit on Common Items (Business +Personal)

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.

Benefits of claiming GST Input Tax

There are multiple benefits attached to GST input tax credit with the main one of lowering GST liability. These are listed below: 

• When claiming GST input tax, the overall business expenses are reduced, making the product or service offered cheaper.
• It improves cash flow so companies can reinvest in their business or pay for other expenses.
• Businesses can remain competitive by passing the savings from GST claims on to customers.
• It ensures tax efficiency by preventing overpayment and helps businesses comply with regulations.

Conclusion

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.