Transitional Rules for GST Rate Change

The following are examples of a supply that span the change of GST rate:

• You issue an invoice on your supply of goods to your customer in 2023, but you only receive full payment and deliver the goods after 1 Jan 2024.
  

• You issue an invoice on your supply of services to your customer after 1 Jan 2024, but you receive partial payment and perform a part of the services in 2023.

• As an RC business, you procure services from an overseas supplier where the invoice is issued and the services are performed in 2023, but you only make full payment after 1 Jan 2024.

You deliver goods to your customer on 26 Dec 2023 when the GST rate is 8%. You issue a tax invoice dated 3 Jan 2024 for the sales of goods and you receive full payment from your customer on 10 Jan 2024.

Under the general time of supply rule, 9% GST is chargeable on the supply as the tax invoice is issued and full payment is received after the rate change. However, you can elect to charge 8% GST on the entire value of the supply as the goods are fully delivered in 2023.

If you have already issued a tax invoice with 9% GST charged to your customer before you make the election, you will need to provide your customer with a credit note* for the amount of GST overcharged by 15 Jan 2024. However, where you are unable to issue the credit note* for the GST overcharged by 15 Jan 2024, the Comptroller will allow you up to 90 days after the issue of your original tax invoice to issue the credit note for ease of compliance.

You do not need to seek prior approval from IRAS when you make an election for your supply. However, you should maintain the documentary evidence to show that the goods are delivered before the rate change.

You have issued an invoice showing 8% GST in 2023 but you receive payment and deliver the goods / perform the services on or after 1 Jan 2024:

1. If the original invoice issued by you is a tax invoice, you should adjust the GST amount charged on the original tax invoice by issuing a credit note and a new tax invoice (showing 9% GST) to your customer by 15 Jan 2024*.
2. If the original invoice issued by you is a non-tax invoice (e.g. receipt issued to your non-GST registered customer), you can adjust for the transaction based on your normal business practices.

* In recognition that some businesses may need more time to issue the credit notes and new tax invoices required to make the necessary GST adjustments, IRAS is prepared to allow businesses up to 31 Mar 2024 to do so, for ease of compliance. There is no need to seek approval from IRAS for this extension. For more information, please refer to the e-Tax Guide: 2024 GST Rate Change: A Guide for GST-registered businesses. 

You should account for the additional output tax on the part of supply that is subject to 9% GST at the earliest of the following events:

1. When the new invoice for the part of supply is issued;
   
2. When the payment for the part of supply is received; or
   
3. 15 Jan 2024*.

* If you require more time to adjust your transactions (e.g. issue credit notes and new tax invoices), IRAS is prepared to allow you up to 31 Mar 2024 to do so. Correspondingly, you may account for the additional output tax based on the date of issue of the credit note and new tax invoice, and this should be no later than 31 Mar 2024. If the original invoice issued by you is a non-tax invoice (e.g. receipt issued to your non-GST registered customer) and it is part of your business practice to adjust your transactions by reissuing new receipts (e.g., to collect the additional 1% GST), you must also account for output tax latest by 31 Mar 2024.

On 14 Dec 2023, you issue a tax invoice for your supply of services (value of $1,000) and you receive the full payment on 4 Jan 2024. You perform part of the services (value of $200) before 1 Jan 2024 and the remaining part of the services (value of $800) after 1 Jan 2024.

Under the transitional rules, you are required to charge 9% GST on $800 of the supply (being the lower of the value of the payment received ($1,000) or services performed ($800) on or after the rate change date).  

• a credit note for $864 ($800 plus 8% GST of $64); and
• a new tax invoice for $872 ($800 plus 9% GST of $72).
  

You should declare the credit note and new tax invoice in the GST accounting period in which they are issued as follows:

*Note: Alternatively, you may also issue a credit note to cancel the original tax invoice issued on 14 Dec 2023 charging GST at 8% and at the same time, issue new tax invoice(s) for the parts of the value of supply which are subject to GST at 8% and 9% respectively. For more information, please refer to the e-Tax Guide: 2024 GST Rate Change: A Guide for GST-registered businesses.

On 14 Dec 2023, you issue a tax invoice for your supply of services (value of $1,000). Before 1 Jan 2024, you receive payment of $500 and perform part of the services (value of $200). After 1 Jan 2024, you receive the remaining payment of $500 and perform part of the services (value of $800).

Under the transitional rules, you are required to charge 9% GST on $500 of the supply (being the lower of the value of the payment received ($500) or services performed ($800) on or after the rate change date).  

You should issue the following to your customer by 15 Jan 2024:
• a credit note for $540 ($500 plus 8% GST of $40); and
• a new tax invoice for $545 ($500 plus 9% GST of $45).

You should declare the credit note and new tax invoice in the GST accounting period in which they are issued as follows:

(a) Supply of LVG

Based on the time of supply rules, GST is chargeable at 8% when the invoice is issued on 15 Dec 2023. As payment is also received before 1 Jan 2024, GST remains chargeable at 8% on the full $1,000 even though goods are received by customer after 1 Jan 2024.

(b) Supply of non-digital services

Based on the time of supply rules, GST is chargeable at 8% when invoice is issued on 1 Sep 2023. However, as payment is not received and services are not performed before 1 Jan 2024, GST is chargeable at 9% on the entire value of the supply (i.e. $1,000). The additional 1% GST should be accounted for in the accounting period in which 6 Jan 2024 falls.

An overseas supplier that is GST registered under the OVR regime enters into a contract in Aug 2023 to provide remote services to a non-registered person in Singapore as follows:

Value of supply performed in 2023: $200 (4 x $50)

Value of supply performed on/ after 1 Jan 2024: $800 (16 x $50)

Based on the time of supply rules, GST is chargeable as follows: 

• 8% on payment of $100 received on 1 Sep 2023; and
• 9% on $900 when invoice issued/balance payment received on 10 Jan 2024

However, you may elect to charge GST at 8% on $200 which is the higher of services performed in 2023 (i.e. $200) and payment received in 2023 (i.e. $100). Since you would have already charged and accounted for GST at 8% on $100 when payment was received on 1 Sep 2023, you may elect to charge GST at 8% on an additional $100 out of the $900 when the invoice is issued/ balance payment received on 10 Jan 2024.

You procure imported services from your overseas supplier who performs the services on 21 Dec 2023 when the GST rate is 8%. The supplier’s invoice is issued on 11 Jan 2024 and you make the full payment on 23 Jan 2024.

Under the general time of supply rule, the supply of imported services is subject to reverse charge at 9% GST as the invoice is issued and full payment is made after the rate change. 

However, you can elect to account for GST at 8% on the entire value of the supply as the services are fully performed in 2023.

You do not need to seek prior approval from IRAS when you make an election for your reverse charge supply. Nevertheless, you should maintain the necessary documentary evidence and records to show that you have made the election and the services are performed before the rate change.

You should account for the additional output tax on the part of supply that is subject to reverse charge at 9% GST at the earlier of:

1. When the payment for the part of supply is made; or
2. 15 Jan 2024.

You procure imported services (value of $1,000) from your overseas supplier who issues the invoice on 3 Dec 2023 and performs part of the services (value of $300) on 15 Dec 2023. You make full payment for the supply on 5 Jan 2024.

Under the general time of supply rule for RC transactions, you should account for GST at 8% on $1,000 in the GST accounting period in which 3 Dec 2023 falls, i.e., the date when the supplier's invoice is issued.