Importance of GST for a business owner

Every country has unique accounting treatments for goods and services. Singapore has also made customer accounting changes that will be effective from the 1st January 2019. For a business owner, it is important to understand the impact of these changes on their goods. The changes have been made to deter fraud schemes and maintain the identity of the country as a low fraud country.

A lot of sellers hide details about their GST collection and they claim an input tax credit for the same. This can be done by using a software and manipulating the numbers. GST is applicable on the sale of all goods and services except precious metals investments, financial services and residential properties.

  • Understanding customer accounting

Every business has to account for GST and input tax credit on the same will be allowed to the businesses that pay the GST for purchases made by them. With regard to the customer, a customer accounting will reflect the output tax. From the process of manufacturing to sale, the ultimate liability of the output tax will shift on the customer. And in order to claim a credit, the customer should be registered under GST, should have purchased the prescribed goods and they should be purchased in the course of business. In this case, the supplier will not be able to charge GST because the sale is subject to customer accounting. It is important to not that customer accounting will not apply to non prescribed goods or services.

Every supplier will have to report the supply in their GST return and when both, prescribed as well as non prescribed goods and services are sold, the GST exclusive sale value will be used when the supply is more than $10,000. The supplier will have to provide a tax invoice to the customers which will show that he has not collected GST on the supply. Further, the invoice should indicate that the customer is responsible to account for GST on the supply of goods or services.

  • Benefit from an input tax credit

This rule is beneficial to the customers as it allows them to claim an input tax for the purchase. If you are a business owner, you can use the information from here and ensure that you adhere to the accounting laws of Singapore. Even as a consumer, you need to have the knowledge and understanding of how GST works so that you can claim a tax credit on the purchases made by you in the due course of your business.

When you understand the accounting laws, it becomes easier for you to prepare the books of accounts and ensure that the invoices meet the standard requirements. If you are unable to understand the impact of the latest amendments in the accounting laws, you can hire a professional consultant to help you with the same. Keep in mind that GST will only be applicable if you are dealing in the sale of prescribed goods and services.

 

 

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