How much GST should I be paying when new change kicks in 2023?

The goods and services tax (GST) rate will be raised from 7 to 8 per cent from January next year and to 9 per cent from 2024.

From next year, the new rate will also apply to any item valued up to $400, defined as low-value goods, bought from GST-registered sellers or platforms, such as e-commerce sites, and imported into Singapore via air or post.

More than 300 overseas vendors, including overseas online marketplaces, have registered for GST under Singapore's Overseas Vendor Registration (OVR) regime.

All imported goods now, regardless of value and brought in via sea or land, are subject to 7 per cent GST. The same applies to goods above $400 and brought in via air or post.

GST will also apply to purchases of non-digital services, such as telemedicine, from January, if bought from GST-registered suppliers.

With the change approaching, consumers may find themselves in tricky scenarios, such as payment plans that cross into the next year.

Here are some examples of these and what will happen:

Q: I have bought and paid for a $100 bag from a GST-registered overseas seller. The bag will only arrive in Singapore in late January next year. Do I have to pay GST?

A: No, you do not need to pay GST. When you bought the bag, the seller did not have to charge GST as the changes had not kicked in. As it is valued below $400, it will also qualify for import relief.

Q: I have bought and paid for a $450 laptop from a GST-registered overseas seller. My laptop will only arrive in Singapore in late January. How much GST do I have to pay?

A: GST is charged at 8 per cent on the import of goods over $400 on or after January 1, so you will pay 8 per cent GST to Singapore Customs for the laptop as it is coming in after Jan 1.

Q: I subscribed to a cleaning service on Dec 31 and the invoice is issued to me on the same day, with 7 per cent GST charged. The cleaning service is provided on January 2 and the payment is due on that day. How much should I be paying?

A: The new 8 per cent GST rate applies on services performed on and after January 1, 2023, even though the invoice was issued in December. The supplier may cancel the original tax invoice and issue a new one with 8 per cent GST charged. Alternatively, he could retain the original invoice and absorb the additional 1 percentage point of GST.

Q: I subscribed to a one-year music streaming service starting on Dec 10 and the invoice (with 7 per cent GST) is issued on the same day. I make the payment on Jan 5 next year. How much will I be charged?

A: GST is charged at 7 per cent on services performed before January 1, 2023, and 8 per cent after that. In this case, 343 days (Jan 1 to Dec 9, 2023) are subject to 8 per cent GST, while the 22 days before the change kicked in are subject to 7 per cent GST.

Alternatively, the supplier may also choose not to cancel the original invoice and absorb the additional GST.

Q: I booked a hotel package for my wedding in 2023 and I have already paid the deposit. The balance will be paid later in 2023, after the new GST rate kicks in. How much more do I have to pay?

A: GST is charged at 7 per cent on payment made before January 1, 2023, and 8 per cent on payment made after that. In this case, the remaining unpaid balance will be subject to 8 per cent GST.

Q: I buy a television set in December and sign up for a 10-month instalment plan from December to September next year. I make the first instalment payment in December, and the TV is delivered in January. How will my instalments change?

A: You will pay 7 per cent GST on the instalments made before January 1, 2023, and 8 per cent on the subsequent instalments. However, if the TV is delivered to you before January 1, 2023, you will pay 7 per cent on all subsequent instalments.

Q: I signed up for a three-year course that started on Jan 1, 2021, and will end on Dec 31, 2023. The invoice for the course fees for 2023 will be issued to me in December this year, with 7 per cent GST charged. How much do I pay for my 2023 fees?

A: If you paid the course fees for 2023 in full before the change kicks in, the GST rate is 7 per cent. If you pay the course fees on or after January 1, 2023, you will be charged 8 per cent GST.

ALSO READ: GST voucher 2022: Everything you need to know plus the amount you'll get

This article was first published in The Straits Times. Permission required for reproduction.