Goods and Services tax is a tax on the domestic consumption. The tax is paid when money is spent on goods or services including imports. “Output Tax” is the GST charged on the local supplies of goods and services. “Input Tax” is the GST charged on the local purchases of goods and services for the purpose of his business. The Input tax is deducted from output tax to arrive at the GST payable by the trader. The GST rate is fixed at 7%.
GST – Retailers
Retailers are required to follow some requirements such as price displays and invoicing. The scenarios that can be faced are consignment sales, concessionaire sales, vouchers that are sold for consideration and given away free, or hire-purchase arrangements.
Price tags, price lists, brochures, websites, advertisements and quotations etc should contain the price inclusive of GST. This enables the customer to know the final price payable. Failure to comply with the requirements can lead to a penalty or a fine of $5000.
If the customers to whom the end product is sold are non – GST registered a receipt is to be issued instead of a tax invoice. The receipt must show your name, address, GST registration number, date of issue, total amount payable including GST, and the words “Price payable includes GST”. For sales value (including GST) of more than $1000, you must issue a separate tax invoice if a GST-registered customer so requests. This is to enable the customer to make an input tax claim. The tax invoice must show the GST amount and include your GST registration number and the customer’s name and address. Where the sales value (including GST) is not more than $1000, you may issue a simplified tax invoice instead of a tax invoice to the GST-registered customer.
If it is agreed to absorb the GST payable by the customer, the price paid by the customer should be the one inclusive of GST. If discounts are given to the customers, the GST is calculated on the net discounted price. The GST amount to be shown on a tax invoice or receipt can be rounded to the nearest whole cent.
Consignment Sales- GST- Retailer
A consignment sale is a trading agreement in which a seller sends goods to a buyer who pays the seller only when the goods are sold. It means you have agreed to sell the goods without first buying the goods from the owner. The GST treatment depends on whether it is a “Sale or return” Sale or “Agency” Sale.
‘Sale or return’ sales
Sale or return sale is done when you purchase the goods from the owner at the time when a buyer is found for the goods.In this case, GST is charged on the full selling price of the goods.
In this case, you act as an agent of the owner and sell the goods on behalf of the owner. In this case, GST is to be charged on the commission that is received. If the owner is registered, he has to charge GST on the sale of the goods.
Concessionaire Sales, is an agreement where a person occupies a space in your store to sell their products. IN this case you may operate stores belonging to other retailers. The GST treatment depends on the contractual agreement between the host store and the concessionaire. There are two scenarios- First case being, the goods may be sold to the host store at an agreed price usually at a discount from the retail price. In this scenario there are two supplies, the sale of goods to the host store and host store’s sale to the customer. The concessionaire must charge and account for GST on the sale of goods to the host store, if he is GST-registered. The host store, if he is GST-registered, must charge and account for GST on the sale of goods to the customer.
In the second case, The host store sells the goods to the customer at the same price as the concessionaire has sold them to him. The host store then collect a fee or commission, which is usually a percentage of the concessionaire sales, from the concessionaire. Here there are three supplies;
The concessionaire’s sale of goods to the host store; (b) The host store’s sale of goods to the customer; and (c) The fee/commission collected by the host store from the concessionaire. The concessionaire must charge and account for GST on the sale of goods to the host store, if he is GST-registered. On the other hand, the host store must charge and account for GST on both the sale of goods to the customer and the fee/commission collected from the concessionaire, if he is GST-registered
In the third case, The host store provides a licence to the concessionaire to occupy and trade in the store. The concessionaire operates his own cash register at the store. In this case, there are two supplies: (a) The concessionaire’s sale of goods to the customer; and (b) The licence fee collected by the host store from the concessionaire. The concessionaire must charge and account for GST on the sale of goods to the customer, if he is GST-registered. The host store, if he is GST-registered, must charge and account for GST on the licence fee collected from the concessionaire.
When a customer trades his old vehicle for a new vehicle, GST will be charged on the sale of the new vehicle and also on the trade of the old vehicle against the new vehicle.When a part payment is received as a deposit for a sale, GST will be charged on the deposit.
When a customer returns goods it is considered an abortive sale, if tax invoice has already been issued, then a credit note needs to be issued to make a refund to the customer.If the sale was made to a Non- GST registered customer, the original receipt needs to be cancelled and refund is to be made to the customer.
When money is returned back in the form of volume rebates , i.e rebate received at the time of purchase, the rebate will be deemed as a discount, a credit note will be issued. When promotional rebates are offered , a tax invoice has to be issued to the supplier and GST is to be accounted on the rebate received.
GST need not be accounted for vouchers given away for free. When vouchers are sold for consideration and where you are able to track the redemption, you do not have to account for GSt at the time of sale and when the redemption cannot be tracked, the GST will be accounted at the time the voucher is sold. You may sell product vouchers that entitle the holder to redeem for a specific product. You have to account for GST when payment is received as the consideration received from the voucher sale is treated as a prepayment for the goods and services to be supplied.
If acting as an agent, GST needs to be accounted on the commission that is received. When you act as a principal, you have to account for GST on the margin earned.
Goods Sold Under Hire-purchase
The sale of goods under a hire purchase agreement contains two supplies, supply of goods and supply of credit. You have to charge and account for GST on the selling price of the goods. GST is not chargeable on the hire-purchase interest if it is separately disclosed to the hirer. When you repossess goods under a hire-purchase agreement, there is no supply for GST purposes. Therefore, no GST is to be charged. When you subsequently sell the repossessed goods, the sale is treated as being made by the hirer. Therefore, if the hirer is a GST-registered person, you have to charge and account for GST on the sale on behalf of the hirer2. If the hirer is not a GST-registered person, you do not have to charge GST on the sale of the repossessed goods.
Selling Goods to Tourists
Under the Tourist Refund Scheme, tourists may receive a refund of GST on goods purchased from GST-registered retailers who participate in the scheme. TRS is available to tourists who are bringing their purchases out of Singapore via Changi International Airport or Seletar Airport, within 2 months from the date of purchase and subject to the tourists’ eligibility and conditions of the scheme.
Benefits of GST-Retailers
- Less Taxes
- Free flow of goods across the nation
- Streamlined supply chain
- Changes in decision making
- Growth of Retail Market
Retail businesses will flourish more, thus contributing to overall growth of Indian economy. GST will depose total indirect taxes, upsurge supply chain efficiency and facilitate seamless input tax credit. The end price for consumers will also reduce because of GST. Except some clauses, GST will benefit retail sector in a big way.
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