In Singapore’s tax ecosystem, the Goods and Services Tax (GST) is designed to be a tax on consumption, not on businesses. To ensure this, the Inland Revenue Authority of Singapore (IRAS) allows GST-registered businesses to recover the GST they pay on their business inputs. This recovered tax is known as Input Tax.
Effectively managing your Input Tax claims is crucial for maintaining healthy cash flow. In an environment with a 9% GST rate, failing to claim back what you are owed is essentially leaving money on the table. However, the rules for claiming are strict, and errors can lead to IRAS audits and penalties.
This guide provides a clear roadmap on what qualifies as Input Tax, the conditions you must meet to claim it, and a step-by-step breakdown of the filing process.
Key Takeaways
- What It Is: Input Tax is the GST you pay to your suppliers for goods or services used for your business.
- The Goal: To offset the Input Tax (what you paid) against your Output Tax (what you collected from customers).
- Eligibility: You must be GST-registered, possess a valid tax invoice, and ensure the expense is strictly for business purposes.
- Blocked Items: Certain expenses, such as passenger car costs and family benefits, are blocked and cannot be claimed.
- Record Keeping: All original tax invoices and receipts must be retained for at least 5 years to meet IRAS requirements.
What is GST Input Tax?
GST in Singapore works on an “Input-Output” mechanism.
- Output Tax: The 9% GST you charge your customers when you sell your products or services.
- Input Tax: The 9% GST you pay to other businesses when you buy raw materials, rent an office, pay for utilities, or purchase professional services.
At the end of your GST filing period, you subtract your total Input Tax from your total Output Tax. If your Input Tax is higher than your Output Tax, IRAS will issue a GST refund to your business.
Conditions for Claiming Input Tax
You cannot claim Input Tax on every purchase. To be eligible for a claim, all the following conditions must be met:
- GST Registration: Your business must be GST-registered at the time the tax was incurred.
- Business Purpose: The goods or services must have been used (or will be used) for the purpose of your business.
- Valid Documentation: You must hold a valid tax invoice addressed to your business, or an import permit showing you are the importer of the goods.
- Taxable Supplies: The input tax must be attributable to the making of taxable supplies (standard-rated or zero-rated supplies).
- Payment Status: You must have paid the supplier (or be liable to pay within a certain timeframe).
The “Blocked” List: Expenses You Cannot Claim
IRAS specifically prohibits claiming Input Tax on certain “blocked” expenses, even if they are for business use. These include:
- Passenger Cars: All costs related to the purchase, hire, or running of “S-plated” cars (including petrol and repair).
- Club Subscription Fees: Entrance or subscription fees for sports or recreation clubs.
- Medical Insurance & Expenses: Costs for employees (unless mandatory under the Work Injury Compensation Act).
- Benefits for Family/Relatives: Any goods or services provided to the family members or relatives of your employees.
- Transactions with Non-GST Registered Suppliers: If a supplier is not registered for GST, any “tax” they charge is invalid and cannot be claimed.
How to Claim Input Tax: Step-by-Step
The claim process is integrated into your quarterly or monthly GST F5 return.
Step 1: Accumulate and Verify Invoices
Ensure you have original tax invoices for all purchases. Check that the invoice includes your business name and address, the supplier’s GST registration number, and the 9% tax breakdown.
Step 2: Sum Up Your Total Input Tax
Calculate the total amount of GST paid across all eligible business expenses during the accounting period.
Step 3: Complete Box 7 of the GST F5 Form
When logging into the IRAS myTax Portal:
- Enter your total taxable purchases in Box 5.
- Enter the total Input Tax amount you are claiming in Box 7.
Step 4: The Offset
The portal will automatically calculate the difference between your Output Tax (Box 6) and your Input Tax (Box 7).
- If Box 6 $>$ Box 7 = You pay the difference to IRAS.
- If Box 7 $>$ Box 6 = IRAS owes you a refund.
Common Pitfalls to Avoid
- Claiming on Pro-forma Invoices: Never claim GST based on a pro-forma invoice or a quote. You must have the final Tax Invoice.
- Late Claims: If you missed a claim in a previous quarter, you can still claim it in a subsequent return, provided it is within 5 years from the end of the relevant tax period.
- Incorrect Name: Ensure invoices are made out to the registered business name, not to a director or employee personally.
Did You Know?
If your business is newly registered for GST, you may be eligible to make a Pre-registration GST Claim.
This allows you to claim Input Tax on goods you still hold (such as inventory or equipment) and on certain services purchased
before your effective date of GST registration, subject to specific IRAS conditions.
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Conclusion: Meticulous Records Lead to Maximum Claims
Input Tax recovery is a right for every GST-registered business in Singapore, but it requires diligent record-keeping. By understanding which items are claimable and ensuring your suppliers provide valid tax invoices, you can significantly lower your operational costs. Leveraging a modern payment platform to track your business spending and revenue provides the digital audit trail needed to make every GST filing season smooth and accurate.
Frequently Asked Questions (FAQs)
1. Can I claim Input Tax if I lost the original receipt?
Strictly speaking, IRAS requires the original tax invoice. If you lost it, you should request a “Duplicate” from your supplier. Without it, your claim may be rejected during an audit.
2. Is there a minimum amount for claiming Input Tax?
No. There is no minimum dollar amount required to claim Input Tax; you can claim any eligible GST amount, no matter how small.
However, the documentation requirements change based on the amount:
- For purchases below S$1,000: You may use a Simplified Tax Invoice (such as a standard point-of-sale receipt) to support your claim.
- For purchases above S$1,000: You must have a Full Tax Invoice that includes your business name and address to be eligible for a claim.
3. What if I am not GST-registered?
If you are not registered, you cannot claim any GST back from IRAS. In this case, the GST you pay to suppliers is simply treated as part of your business cost.
4. How long does IRAS take to process a refund?
Most GST refunds are processed within 30 days of filing, provided you have no outstanding tax issues and your bank details are updated on the myTax Portal.
