Step-by-Step Help for Claiming Input Tax in Singapore

If you run a business in Singapore and charge GST (Goods and Services Tax), there is good news for you. You can get back some of the GST you pay when you buy things for your business. This is called claiming input tax. It means you can recover the GST paid on business items like stock, rent, tools, or services. Claiming input tax in Singapore helps your business save money. It keeps your costs low and gives you more money to use for other things your business needs.

When you understand how claiming input tax works, it becomes much easier to manage your money. You won’t lose the GST you paid on business buys. By learning the steps of claiming input tax in Singapore, you can run your business in a smart, simple, and stress-free way.

What Is Input Tax?

Input tax is the GST (Goods and Services Tax) you pay when you buy things for your business. These things could be stock for your store, tools for your job, rent for your office, or services like cleaning or repairs. The GST can be claimed back if your business is registered for GST.

Example: You own a small café in Singapore. You buy a big bag of rice to cook food. You pay SGD 3 in GST for the rice. That SGD 3 is input tax. Because you bought it for your business and you are GST-registered, you can claim that money back by claiming input tax in Singapore.

Now let’s look at how GST works for your business:

• The GST from your customers is collected whenever you sell any services, and this is under the output tax.
• When you buy things for your business, you pay GST. This is your input tax.
  

At the end of every GST filing period (usually every 3 months), you compare your input tax and output tax:

• If your output tax is more, you must pay the difference to IRAS.
  
• If your input tax is more, IRAS will give the extra back to you.
  

This makes claiming input tax in Singapore a very smart way to save money. It means you don’t lose the GST you already paid for your business. The amount to get back can be used for the business growth and development.

Step-by-Step: Claiming Input Tax in Singapore

To get back the GST you paid for your business, you need to follow some easy steps to make sure that claiming input tax in Singapore is conducted correctly.. Let’s walk through the steps one by one.

1. Register for GST

Before you can start claiming input tax, your business must be registered for GST with the IRAS (Inland Revenue Authority of Singapore).

• If your business earns more than SGD 1 million a year, you must register.
  
• If your business earns less, you can still register voluntarily.
  

Once you are registered, you can start claiming input tax in Singapore for your business purchases.

2. Keep Good Records

To claim back the GST you paid, you must save your documents. This includes:

• All receipts and invoices
  
• Bills that show the GST amount
  
• Papers with your supplier’s name and details
  

Make sure each document shows clearly how much GST you paid. These records help you prove your input tax to IRAS when needed.

3. Separate Business and Personal Use

You can claim input tax for:

• Stock for your shop
  
• Office rent
  
• Tools or machines used at work
  

You cannot claim input tax for:

• Family groceries
  
• Toys for your kids
  
• Personal holidays
  

Claiming input tax in Singapore only works if the items are for your business.

4. Enter Into Your System

Next, you need to keep track of what you buy.

• You can go with the simple spreadsheet or even the accounting software.
  
• Add everything  the amount you paid, and the GST paid
  
• Label each GST amount as “input tax”
  

This will help you when you file your GST return later.

5. Do the De Minimis Checks

Sometimes, your business might have exempt income, like interest from a bank. You need to do two checks to see if you can claim all your input tax:

• Test 1: Your exempt sales are 5% or less of your total sales
  
• Test 2: The GST on your exempt purchases is SGD 10,000 or less and 5% or less of all your input tax
  

 If you pass one of these, you can claim all your input tax.
  If you fail both, you have to prorate, which means you only claim part of it.

Doing these tests is a key part of Claiming input tax in Singapore the right way.

6. Complete Your GST Return

Every three months, you need to file a report with IRAS. This is called your GST return.

• Input tax and output tax both are added.
  
• Report them both in the return
  
• IRAS returns the extra money if the input tax is more.
  

This is how Claiming input tax helps your business save money and keep your cash flow strong.

7. Keep Your Records

After you file your GST return, don’t throw away your papers!

• Keep all your receipts, bills, and files for at least five years
  
• IRAS may want to check your records to make sure everything is correct
  

Good records make it easy to prove that your Claiming input tax in Singapore was done the right way.

Importance of Claiming Input Tax in Singapore

Here are the main reasons why Claiming input tax in Singapore is very helpful for your business:

1. Saves You Money

When your business pays GST on items or services, you can get that money back by Claiming input tax. This helps your business spend less and keep more money.

2. Keeps Business Costs Low

Getting back the GST you paid means lower costs for your business. Claiming input tax in Singapore helps you avoid paying more than you need.

3. Gives You More Cash to Use

When you claim input tax, you may get a refund from IRAS. This gives your business more cash to use for things like supplies, rent, or staff.

4. Makes You Follow the Rules

By Claiming input tax the right way, you follow the GST rules from IRAS. This keeps your business safe and helps you avoid fines or mistakes.

5. Helps Your Business Grow

Saving money and keeping good records means your business is in better shape. Claiming input tax in Singapore gives you more tools to grow your business the smart way.

Claiming input tax in Singapore is a smart way to save money on GST you pay for your business. To succeed, you need:

• Claiming input tax in Singapore – done correctly
  
• Save proper invoices
  
• Choose only what is for business
  

By sticking to these steps, you keep your books accurate and your refund fast. Meru Accounting can help you set it all up, help you through each step, and make sure your claiming input tax is easy and stress-free.

FAQs

1. When can I start claiming input tax?
   You can claim after you register for GST with IRAS.
2. What if I forget an invoice?
   Keep copies for at least five years. If missing, you may not claim it.
3. Can I claim input tax on my phone and laptop?
   Yes, if you use them for business. Just keep invoices.
4. What is the de minimis rule?
   It helps small exempt sales/services claim full input tax if they pass one of two simple tests.
5. How quickly will I get the refund?
   When you file your GST return, IRAS will check it. If all is right, you get your refund in a few weeks.