Under the Gross Margin Scheme, GST is accounted for on the gross margin instead of full value of the goods supplied.
Gross Margin = Selling Price (inclusive of GST) - Purchase Price
GST = Gross Margin x 7/107
You are in the business of selling second-hand cars. You bought a car from a non-GST registered person at $1,000 and sold the car to your customer for $1,500.
Based on the Gross Margin Scheme:
GST = ($1,500 - $1,000) x 7/107 = $32.71
Value of standard-rated supply: $1,467.29 (i.e. $1,500 - $32.71)
Output tax due: $32.71
When the selling price is lower than or equal to the purchase price, the gross margin is treated as nil and no GST has to be accounted for.
However, the selling price is to be reported in Box 1 (Total value of standard-rated supplies) of the GST return.
You are in the business of selling used goods
For instance, dealers in second-hand motor vehicles electrical appliances, furniture or jewellery are in the business of selling used goods.
You should not use the scheme if you make once-off or occasional sale of used goods such as disposal of business assets.
The used goods were purchased free of GST.
This includes goods purchased from:
To review your eligibility, use the Self-Review of Eligibility and Declaration on Use of Gross Margin Scheme (GMS) (192KB).
After verifying that all conditions and obligations stated in the form can be satisfied, please submit the original form to IRAS.
You can begin to use the Gross Margin Scheme from the date of declaration. No further approval is required from IRAS.
If you had previously obtained approval to use the scheme, you can continue to use the scheme. You do not need to submit the form to IRAS.
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No. You cannot issue a tax invoice for sales made under the Gross Margin Scheme. You can only issue a normal sales invoice which must have the following details:
Please note that the GST chargeable is not to be shown on the invoice.
No. For the first sales transaction, no GST has to be accounted for. For the second sales transaction, you have to account for GST on the gross margin of the goods.
You cannot offset the loss in the first sales transaction against the gross margin on second sales transaction for the purpose of determining the total GST to be accounted for.