There are two main types of supplies that are exempt from GST. They are the provision of financial services and sale/lease of residential properties. The list of exempt supplies is defined in the Fourth Schedule of the GST Act.
Input tax for exempt supplies
If you make both taxable and exempt supplies, you are required to apply the De Minimis Rule. Under the De Minimis Rule, you may treat all your input tax to be incurred for the making of taxable supplies and claim input tax in full. If the De minimis rule is not satisfied, you can only recover the input tax that is attributable to your taxable supplies.
Reporting your exempt supplies
Exempt supplies have to be reported in Box 3 (Total value of exempt supplies) of your GST return. Find out more on value of exempt supplies to be reported in Box 3 in How Do I Prepare My GST Return (520KB). The normal time of supply rules apply for exempt supplies.
Find out more about De Minimis Rule on Partially Exempt Traders and Input Tax Recovery (468KB).
FAQs
Yes. The exempt supplies make up for Box 3 of the GST return. The normal time of supply rules apply.
Zero-rated supplies are taxable supplies applied with 0% GST. Exempt supplies are non-GST charged items. Input tax incurred for making zero-rated supplies is claimable. However, the input tax incurred for making exempt supplies is not claimable.
Strictly, only realised gains or losses from foreign currency or derivative transactions should be reported as the value of exempt supplies for GST purposes. However, we are prepared to allow you to report total value of realised and unrealised gains or losses if it is adminstratively cumbersome for you separately track whether gains or losses are realised or not if the following conditions are satisfied:
(a) Your accounting practices conform to proper accounting and reporting standards.
(b) You adopt same basis of reporting value of exempt supplies from foreign currency and derivative transactions consistently.
You should also be aware that reporting unrealised gain or losses may affect your input ta claims. Thus, you are advised to evaluate your compliance costs involved in separately tracking realised gains or losses and the impact on your input tax claims.