HOW DOES GST WORK?
At a glance, GST comes with a flat rate of 6% on the invoice value. Below is a simple example to show the mechanics of GST in practise:-
As you can see, burden of paying the 6% GST is on the Consumer.
GST is NOT a cost to businesses, but rather to the Consumers only.
However, there are exceptions to the rule. In next part of this article, we will see the different types of supplies that will affect how GST will impact a Taxable Person.
TYPES OF SUPPLY
There are basically 4 types of supplies scenario, each carrying different impact to the taxable person.
- Standard-rated : Output tax is 6% and Input Tax is claimable
- Zero-rated : Output tax is 0% and Input Tax is claimable
- Exempt : Output tax not chargeable and Input Tax is not claimable
- Out-of-Scope : Output tax is not applicable and Input Tax is not claimable
In the next article, we will talk about taxable supplies, value of supply and time of supply.