What You Need to Know About 2023’s GST Hike: When Does the 8% Not Apply?

As we’re all already aware, starting from 1 January 2023, the first tranche of Singapore’s Goods and Services tax (GST) hike will commence  – increasing from 7% to 8%.

With 2022 drawing to a close, everyone has been scrambling to take advantage of the remaining days of 7% GST. Although this 1% increase can seem marginal and insignificant initially, this number adds up quickly for both everyday purchases and big-ticket items.

For all your (last-minute) Christmas shopping, the 7% GST rate remains pretty straightforward. But what happens for other scenarios where you placed an order in 2022, but your invoice, receipt and/or items only arrive on or after 1 January 2023? That’s when major confusion arises.

In this article, we’re going to clear the air on these awkward “7% or 8%?” GST scenarios.

Table of contents

• Full payment before 1 Jan 2023 
• Full payment on/after 1 Jan 2023
• Partial payment received before and on/after 1 Jan 2023
• Buy-Now-Pay-Later (BNPL) schemes
• Other GST FAQs

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Overview: Changes Made to GST

Here’s an overview of the changes made to the GST from the IRAS website for each specific scenario. We will dive into greater detail later on.

Source: IRAS

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Full payment before 1 Jan 2023

The scenario typically applies to purchasing stocks or pre-ordering items, either in person from overseas retailers or online through platforms like Taobao or Shopee.

Once full payment is made, the invoice will reflect the 7% GST. This is regardless of when you receive the item or when the service is completed, even if you receive it in 2023.

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Full payment on or after 1 Jan 2023

Here is when things get a little tricky. There are three scenarios to be aware of if full payment is only made on or after 1 Jan 2023.

If a service or delivery was completed fully before 1 Jan 2023, the payment will be subjected to 7% GST, even if it is paid on or after 1 Jan 2023.

If the service or delivery is only completed fully on or after 1 Jan 2023, the payment will be subjected to 8% GST.

If the service or delivery is partially completed in 2022 and 2023, the first portion of the completed service or delivery in 2022 will be subjected to 7% GST, while the second portion of the completed service or delivery in 2023 will be subjected to 8% GST.

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Partial payment received before and on or after 1 Jan 2023

This might be confusing for most. And we get it. But let’s break it up for you.

For deposits or any payments made in 2022, they will be subjected to 7% GST. After 1 Jan 2023, any further payments will be subjected to 8% GST.

This usually applies to big-ticket items like renovation works, wedding packages and furniture, where vendors usually request a deposit to be made, while the remainder is either paid in instalments or in a lump sum after the full service or product is completed/received.

If you are still unclear, it’s best you read the fine print of your contract or receipt or have your vendor explain the terms of payment to you. 

💡Pro-tip: There may be some kind retailers who offer you a “7% GST lock-in” even if your instalments are made in 2023. In these cases, they are absorbing the extra 1% for you since they would still have to bear the 8% GST charges.

Read these next:
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Best Renovation Loans in Singapore (2023) 

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Buy-Now-Pay-Later (BNPL) schemes

Payment made	Period of item delivery or service performed	GST rate
Partial payment in both 2022 and 2023	Completed or delivered in 2022	All subject to 7% GST
Partial payment in both 2022 and 2023	Completed or delivered in 2023	Payment made in 2022: Subject to 7% GST Payment made in 2023: Subject to 8% GST

Who doesn’t love Buy-Now-Pay-Later (BNPL) schemes right? It definitely helps to lighten the burden of paying a lump sum at one shot by breaking down the purchase into smaller amounts each month through these instalment plans.

The GST that your item or service is subjected to depends on when you receive it. 

If you receive your item in 2022, all your payments will be subjected to 7% GST, even if you have outstanding payments that roll over into 2023.

But assuming you make your first payment in 2022 but will only receive the item in 2023, then any instalment payments made in 2022 will be subject to 7% GST, while any instalment payments made in 2023 will be subject to 8%.

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More on this topic: Buy Now Pay Later Comparison Guide: Atome, Hoolah and Rely

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Other FAQs about unique GST situations

#1 How much GST do I have to pay for online shopping from overseas retailers?

Goods purchased	GST rate
Overseas retailers	Before 2023 Below S$400: Exempt from GST S$400 and above: Subject to 7% GST After 2023 All items: Subject to 8% GST

Importantly, before 2023, low-valued goods (S$400 and below) imported from overseas via air or post are exempted from GST. However, items above S$400 are subjected to 7% GST.

But do note, starting from 2023 onwards, the GST increase will apply to all imported items, no matter the cost value. This means that all overseas goods (including purchases valued S$400 and below) will be subjected to the 8% GST.

So here’s an example.

Let’s say you want to buy a piece of furniture from Taobao for your upcoming home renovation. If the furniture is S$400 and below, and purchased in 2022, it’ll be exempted from the 7% GST charge. 

However, if you purchased it in 2023, it will be subjected to the 8% GST charge, regardless of the item cost.

💡Pro-tip: Many shoppers opt for Third Party Forwarders (3PF) to ship large, heavy, and bulky items like furniture instead of shipping directly from Taobao via Cainiao.

These 3PFs will calculate your total estimated shipping cost based on your package’s dimensions/volume (in cubic metres) compared to by weight.

However, 3PFs will repack your items upon shipping, so the final cost may vary from the initial quote.

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#2 Will I still have GST relief for my overseas purchases that I bring home personally?

Overseas purchases made in person and brought back to Singapore for personal use

Before 2023 Below S$500: GST relief S$500 and above: Subject to 7% GST After 2023 Below S$500: GST relief S$500 and above: Subject to 8% GST

According to Singapore Customs, travellers are granted GST import relief on overseas purchases for personal use. The relief amount largely depends on the duration spent outside of Singapore. 

For instance, if you’ve been overseas for 48 hours or more, your purchased goods are eligible for S$500 GST relief.

But if you’ve been overseas for less than 48 hours, your purchased goods are only eligible for S$100 GST relief.

#3 Do I still enjoy duty-free concession for liquor?

Alcohol connoisseurs will also be happy to know that liquor products are entitled to duty-free concession as long as you are:

• 18 years old or older
• Spent 48 hours or more outside of Singapore immediately before arrival
• Not arriving from Malaysia
• Liquor is for personal consumption
• Liquor is not illegal to be imported back to Singapore

Once the above criteria are met, the duty-free concession is capped for the following liquors at the respective limits:

Option	Spirits	Wine	Beer
A	1 litre	1 litre	–
B	1 litre	–	1 litre
C	–	1 litre	1 litre
D	–	2 litres	–
E	–	–	2 litres

For travellers
Bonafide crew members have a different set of limits
Figures adapted from customs.gov.sg

However, it is important to note that there is no duty-free concession or GST relief for cigarettes and tobacco products brought into Singapore.

 

#4 Does the GST increase apply to all retail shops?

Most retail shops would charge the extra GST increase, but in certain cases, the shop may choose to absorb the GST.

For example, participating retailers in Changi Airport’s open areas are still continuing to absorb the GST. To qualify, all you need to do is to be a Changi Rewards member, which is totally free-of-charge! 

 

#5 How to calculate GST and service charge after 2023?

Ask a majority of the people and they will tell you that the way you should calculate the GST and service charge is to just multiply 1.18 to your item or service ie. 8% for GST and 10% for service charge.

However, the actual way to calculate would be to multiply the base price by 1.10 first, followed by 1.08, which is essentially multiplying it by 1.188. You’ll actually realise that there is a slight difference between the two costs. 

If you’re always that person in the friend group who’s paying for everyone first, the cents will eventually accumulate into a significant amount. So thank us later.

So if you break it down:

• GST (8%) only: Price x 1.08
• Service charge (10%) only: Price x 1.10
• GST and service charge: Price x 1.188

Here’s an example:

Base price	Wrong way of multiplying (x1.18)	Correct way of multiplying (x1.188)	Difference in cost
S$100	S$118	S$118.80	S$0.80
S$500	S$590	S$594	S$4
S$2,000	S$2,360	S$2,376	S$16

So after the GST increase to 8%, the correct way of calculating the final price would be to multiply the base price by 1.188 instead.

See also: How to Calculate GST and Service Charge in Singapore (2023)

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