In Budget 2022, the Minister for Finance announced that the GST rate will be increased from:
(i) 7% to 8% with effect from 1 Jan 2023; and
(ii) 8% to 9% with effect from 1 Jan 2024.
How will the GST rate change affect you as a consumer?
1) Rate of GST chargeable on your purchases
As a general rule, purchases of goods and services from GST-registered businesses before 1 Jan 2023 will be subject to GST at 7%, and purchases on or after 1 Jan 2023 will be subject to GST at 8%.
There are scenarios where one or more of the following events straddle 1 Jan 2023:
- Issuance of invoice
- Payment for the goods or services
- Receipt of goods or services
In these scenarios, special GST rules will apply. Here are some common scenarios.
Scenario 1
- Full payment for goods or services made before 1 Jan 2023
- Goods or services received on or after 1 Jan 2023
If full payment is received by the supplier for the goods or services before 1 Jan 2023, GST will be chargeable at 7% irrespective of when the goods or services are provided to you.
Scenario 2
- Invoice issued before 1 Jan 2023
- Goods or services received before 1 Jan 2023
- Payment for goods or services made after 1 Jan 2023
If you receive both the invoice and the goods or services before 1 Jan 2023, GST will be chargeable at 7% irrespective of when the payment for the goods or services is made.
Scenario 3
- Invoice issued before 1 Jan 2023
- Full payment for goods or services made on or after 1 Jan 2023
- Goods or services received on or after 1 Jan 2023
If you make full payment and receive the goods or services on or after 1 Jan 2023, GST will be chargeable at 8% even if the invoice is issued before 1 Jan 2023. In this case, as the original invoice will reflect GST at 7%, the supplier will issue a credit note to cancel the original tax invoice, and issue a new tax invoice that reflects GST at 8%.