What You Need to Know About GST



GST

Goods and services tax (GST) is a tax on the final consumption of goods and services. It is also known as value added tax. GST is a multi-stage tax, which imply that the Government will collects taxes at various stages along the delivery process.

GST is ultimately passed to the consumer even though the intermediaries such as manufacturers, wholesalers and retailers paid the taxes during the production and distribution process. Therefore, GST is not a cost to the intermediaries and it will not reflected in their financial statements as an expenditure.

Below are the most commonly use terms in GST.

Input tax – GST that incur to business on the purchases of goods and services as part of its operations.

Output tax – GST that a business charges on the taxable goods and services that it supplies in the course of business.

Standard-rated supplies – taxable supply of goods and services that are subject to a standard rate. In Malaysia, the standard rate is 4%. A taxable business can claim input tax credit on its business inputs in making taxable supplies.

Zero-rated supplies – taxable supplies that are subject to a zero rate. Although no GST is imposed on these supplies, a taxable business can claim input tax credit on its business inputs in making taxable supplies.

Exempt supplies – not subjected to GST. Suppliers of exempt supplies cannot claim the GST incurred on business inputs.


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