GST rate to apply
Generally, you should charge GST at the prevailing rate at the time of supply.
Conversely, if you issue an invoice and receive payment for your supply on or after 1 Jan 2023, you should charge GST at 8% on the supply, unless you have elected to charge GST at 7% under the rate change transitional rules subject to the conditions for the election.
Where you are required to charge GST at 8% on the supply on/after 1 Jan 2023, you must account for GST at 8% in your GST return. This is regardless of whether you have collected the GST payment from your customers.
Example: GST to be accounted for on a supply subject to GST at 8% on/after 1 Jan 2023 where GST is collected at 7%
You have collected GST at 7% on your supply of goods on 2 Jan 2023 ($1,070 inclusive of 7% GST) as your systems were not updated in time. Notwithstanding this, you will still be required to account for GST on the supply at 8% in your GST return.
The amount of output tax to account is based on the tax fraction (8/108) of the total payment received for your supply. In this case, the output tax to include in your GST return will be $79.26 ($1,070 x 8/108).
The failure to account for GST on your supplies at the correct rate may attract penalties. Being prepared for GST rate change will help you avoid such increases to your business and compliance costs.
As a guide, please refer to the Checklist for GST rate change preparation (PDF, 99KB) on the changes that may be required to your systems and business processes to apply the new rate.
You must show GST-inclusive prices on all price displays* to the public (e.g. price tags, price lists, advertisements, publicity brochures, website). Prices that are quoted, whether written or verbal, must be GST-inclusive as the public needs to know upfront the final price that they have to pay.
If you are unable to change your price displays overnight, you may display two prices:
- Prices inclusive of GST at 7%, applicable before 1 Jan 2023; and
- Prices inclusive of GST at 8%, applicable with effect from 1 Jan 2023.
Advisory on Communicating Reasons for Price/Fee Increases to Consumers
Some businesses have been observed to be increasing prices or service fees to account for the additional 1% GST rate increase and also to take into account higher raw material and overhead costs, but have attributed the increase primarily or solely to the increase in GST.
Ahead of the increase in GST rate, the Government would like to remind businesses to be transparent in communicating the reasons for any price increases to consumers. Businesses should explain the main reasons for the increases in price/fee increases, and not misrepresent the situation to consumers by attributing the price increases primarily or solely to the increase in GST.
The Committee Against Profiteering (CAP) takes a serious view of any unjustified price increases using the GST increase as an excuse, and will investigate all feedback on such cases.
Businesses can refer to the following Frequently Asked Questions (FAQs) from CAP's website on how to explain a price increase to consumers and the type of cases that CAP will investigate.
How should I explain a price increase?
Businesses should be transparent with their prices. Sharing the following information will help consumers understand the reasons for your price increase:
- Why are you raising your price?
- What is the effective date of the price increase?
- What is the price before and after the price increase?
You must not misrepresent the reasons for any price increase as this will mislead consumers.
What cases will the Committee Against Profiteering (CAP) investigate?
The CAP will investigate all allegations of unjustified price increases of essential goods and services that use the Goods and Services Tax (GST) as a cover.
A number of factors could lead to price increases, such as an increase in operating costs including wages, utilities, rental and materials.
If a business raises its prices, it is not acceptable for the business to use the GST increase as the reason for raising prices before the GST implementation, nor is it acceptable for a business to raise prices by more than the GST after the GST implementation, citing the GST as the reason.
*An exception is granted to hotels and food & beverage (F&B) establishments that impose service charge on their goods and services. They are not required to display GST-inclusive prices for goods and services that are subject to service charge to ease their operations. However, they must still display a prominent statement informing customers that the prices displayed are subject to GST and service charge.
The exception does not apply to hotels and F&B establishments that do not impose a service charge. It is also not applicable to F&B establishments that levy a nominal service charge without genuine business reasons other than to avoid displaying GST-inclusive prices. Such businesses are still required to display GST-inclusive prices. Those who do not comply with the price display requirement could be subject to a fine.
For more information, you may refer to Displaying and Quoting Prices.
Funding support for Pre-approved Solutions
Webinars in 2022
IRAS organised webinar sessions (via Zoom) for GST-registered businesses from Apr to Dec 2022. Our last webinar for the first GST rate change on 1 Jan 2023 was conducted on 22 Dec 2022.
Webinars in 2023
We will publish information on webinars for the second GST rate change on 1 Jan 2024, in Apr 2023.