This clarification by IRAS was in response to the recent letter “Query on taxes on discounted meal” (ST Forum, 14 Oct 2014) by Mr Chiok Beng Piow.
“Mr Chiok had purchased a Groupon deal for lunch at a restaurant. He asked if the Goods and Services Tax (GST) should be charged on the original price of the lunch of $71 or the discounted price of $38.80.
For discount vouchers which specify the goods or services to be redeemed, GST is charged at the discounted price since this represents the actual value of the goods or services sold. Hence, in Mr Chiok’s case, the GST should have been charged on the discounted price.
IRAS has contacted the restaurant to clarify the correct GST treatment. Mr Chiok can also check with the restaurant on how he can seek a refund for the excess GST paid.”
This goes to show that incorrect application of GST treatment by businesses are still prevalent despite it has been 20 years since GST was first implemented in Singapore. Businesses should seek IRAS or professionals advice if they are not sure of the correct treatment as the penalties for incorrect application will be very punitive.