1. The GST treatment for the retail industry are straight forward, i.e. to standard rate for local supply of goods and services. Other additional requirements specific to retailers include such as price displays, invoicing, returned goods, refunds, free gifts, vouchers that are sold for consideration or given away free, discounts and redemptions.
2. Like all other GST-registered businesses, retailers must also 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 the final price they have to pay upfront. Failure to comply with price display requirements can result in a fine of up to $5,000.
3. Retailers must issue a tax invoice when the customer is GST registered. The customer needs to keep this tax invoice as a supporting document to claim input tax on its standard-rated purchases. This tax invoices issued to the customers must be kept for at least 5 years.
However, a tax invoice does not need to be issued for zero-rated supplies, deemed supplies or to a non-GST registered customer.
4. For returned goods and refunds, the following GST treatments applies:
- issue a credit note to ‘cancel’ a tax invoice issued previously (if any). The credit note must make reference to the original tax invoice issued.
- retain the original tax invoice if the goods are replaced for free.
- reissue a new tax invoice on the replaced goods if the value of the replaced goods is different from the original tax invoice (higher or lower value).
5. When retailers conduct sales promotions to drum up sales, it is common for them to offer discounts or free gifts to their customers. In case of discount given to customers, GST is chargeable on the net discounted price. For free gifts, the whole package (main items and free gift) will be treated as being sold for the price of the main items.
6. No GST is chargeable when a voucher is given away for free. Subsequently, when the voucher is redeemed for goods or services, different GST treatment applies.
When the free voucher is redeemed for goods and no money is received from the customer, GST need to be accounted if the goods are worth $200 or more. If the redeemed goods are worth less than $200, there is no need to account for GST.
For redemption of services, GST need not be accounted if no consideration is received. This is because the deeming of supply is not required for the provision of free services.
In the situation where customer pays for the supply of goods and services upon redemption of the free voucher, you have to account for GST on the money received. For example, a retailer give a $20 voucher to the customer for free. When the customer buys a wallet priced at $100 and uses this voucher to offset their payment, the retailer only need to account for GST on the difference – $80 ($100 less $20). The GST amount should be computed by using the prevailing tax fraction (i.e. 9/109) multiplied by $80.
7. When a discount voucher is sold which entitles the customer to enjoy reduction on the purchase price of goods or services, GST need to accounted for the sale of the discount voucher.
When the discount voucher is later used to purchase of goods or services, GST is chargeable on the discounted price (i.e. gross value less discount) of the goods or services purchased. So please take note not to double charge GST.
8. Please contact us if you company is a GST registered retail business and need assistance to comply with the GST Act. At PL Biz Consulting Pte Ltd, we have the expertise and experienced people to guide you on how to equipped your business to meet the requirements of Singapore GST for the retail industry.
