Goods and Services Tax

In: Business and Management

Submitted By fanykmf
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Main Features of Goods and Services Tax (GST) Our Prime Minister, Datuk Seri Najib Razak announced the introduction of the Goods and Services Tax (GST) in Budget 2014 on 25th October 2013. GST will be effective on April, 2015 and replace the current sales and services tax. GST also known as value-added concept, which is multi-stage tax. GST will be charged on all taxable supplies of goods and services trading in Malaysia by a taxable resident. GST is tax neutral to businesses. GST charged to all intermediaries in the production and distribution chain. Businesses which have registered for GST are allowed to claim input tax credit. GST also is a broad-based tax since all supplies of goods and services will involve GST. Exemption is given to zero-rated supplies and exempt supplies, or those fall within particular special schemes. Besides that, imported services will be subject to GST.

Standard-rated Supplies Standard rate supply those goods and services that are charged GST at a fixed rate. GST is collected by the seller and paid back to government. They can recover back the difference between the input and output tax when their input tax is higher than their output tax.

Zero-rated Supplies Businesses can claim input tax credit in purchasing these supplies. Customer will be charged at zero rate of GST. Most basic food items such as meats, fish, cooking oil, rice, sugar, salt, vegetables and first 200 units of electricity supply used monthly for domestic consumers are classified into this category.

Exempt Supplies These businesses cannot claim tax credit in purchasing these supplies. At the same time, output tax is not allowed to change to consumer. Certain financial services, private healthcare services, domestic passenger transportation, education services, agriculture land supply and residential properties will be exempted from GST based on the…...

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