good and service tax

Topics: Input, Taxation in the United States, Tax refund Pages: 13 (1283 words) Published: May 24, 2014
INTRODUCTION

GST shall be levied and charged on the taxable supply of goods and services made in the course or furtherance of business in Malaysia by a taxable person. GST is also charged on the importation of goods and services. A taxable supply is a supply which is standard rated or zero rated. Exempt and out of scope supplies are not taxable supplies. GST is to be levied and charged at the proposed rate of 6% on the value of the supply. GST can be levied and charged only of the business is registered under GST. A business is not liable to be registered of its annual turnover of taxable supplies does not reach the prescribed threshold. Therefore, such businesses cannot charge and collect GST on the supply of goods and services made to their customers. Nevertheless, businesses can apply to be registered voluntarily. Businesses making taxable supplies have to be registered under GST if their annual sales turnover has exceeded the prescribed threshold. Only a registered person can charge and collect GST on the taxable supplies of goods and services made by him. GST is charged on the value or selling price of the products. The amount of GST incurred on input (input tax) can be deducted from the amount of GST charged (output tax) by the registered person. If the amount of output tax is more than the input tax in the relevant taxable period, the difference shall be remitted to the Government. However, if the input tax is more than the output tax, the difference will be refunded by the Government.

STANDARD-RATED SUPPLIES
Standard-rated supplies are goods and services that are charged GST with a standard rate. GST is collected by the businesses and paid to the government. They can recover credit back on their inputs. If their input tax is bigger than their output tax, they can recover back the difference. Standard-rated supplies are taxable supplies of goods and services which are subject to a proposed rate of 6%. A taxable person who is registered under GST has to collect GST on the supply and is eligible to claim input tax credit on his business inputs in making taxable supplies. How GST is charged at each level of supply chain standard rated supply:

How GST is charged and collected at the wholesale level for standard rated supply:

Computation of GST at all levels of the supply chain for standard rated supply: Level of supply
Sales price (including GST at 6%)
Payment to Government
Raw material supplier
Sales price = RM50.00
GST = RM3.00
Total sales price = RM53.00
GST collection = RM3.00
Less: GST paid =RM0.00
GST payable = RM3.00
Manufacturer
Sales price = RM100.00
GST = RM6.00
Total sales price = RM106.00
GST collection = RM6.00
Less: GST paid =RM3.00
GST payable = RM3.00
Wholesaler
Sales price = RM125.00
GST = RM7.50
Total sales price = RM132.50
GST collection = RM7.50
Less: GST paid =RM6.00
GST payable = RM1.50
Retailer
Sales price = RM156.00
GST = RM9.36
Total sales price = RM165.36
GST collection = RM9.36
Less: GST paid =RM7.50
GST payable = RM1.86

ZERO- RATED SUPPLIES

Zero-rated supplies are taxable supplies of goods and services which are subject to GST at zero percent rates. In this respect, businesses do not collect any GST on their supplies but are entitled to claim credit on inputs used in the course of furtherance of the business. These are taxable supplies that are subject to a zero rate. Businesses are eligible to claim input tax credit in acquiring these supplies, and charge GST at zero rates to the consumer.

How GST works on a zero rated supply:

How GST works on a zero rated supply at the wholesale level :

Computation of GST on zero rated supply:

Level of supply
Sales price(including GST at 6%)
Payment to Government
Wholesaler
Sales price = RM100.00
GST = RM0.00
Total sales price = RM100.00
GST collection = RM0.00
Less: GST paid =RM0.00
GST payable = RM0.00
Retailer
Sales price = RM125.00
GST = RM0.00
Total...
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