GST - Good and Service Tax

This word is getting popular nowadays it especially hot when our PM announce the Bill for GST will be tabled in current Dewan Rakyat sitting.

What is really GST?
GST stands for Good and Service Tax. It is a tax to be imposed when you did a purchase transaction. Example if the GST to be 5% and when you buy some grocery from Tesco the total bill end up being RM 100. The GST is RM 5. So you will have to pay RM 105. Simple as that.

Tesco will then pay to the Government the 5% it charges us and becomes the Raykat monies.

Will this mean we are paying more taxes?
Yes may be. If currently you are not paying any taxes then perhaps you must pay every time you spends. GST = No purchase, no taxes.

For those that are paying income tax perhaps there will be some reduction of current income taxes so that the final taxes you pay will be almost the same. It should be so if not the GST will be additional income to the Government.

For those that are rich and spends luxury but take loopholes to escape hefty income taxes, next whenever to spend you will have to pay taxes.

How will it affect business?
Basically it will not affect business much in terms of tax pay. For a supplier when the sell the raw material to the retailers, they will have to charge a GST in the invoice. And when the retailer sells it to us consumers same it charges the GST. The retailer deduct the GST they paid when purchase with that they collected and pay the Government.

If the supplier do not pay any GST, then they pay to Government the full amount the collect from retailer.

Basically the retailer will no incurs additional taxes but there will be more accounting jobs and IT to trace the GST they pay and GST they collect. Perhaps some cost incurs initially.

Is Good and Service will be charged GST?
Basically yes all. For Malaysia we need to wait for official announcement. Perhaps some good and service are exempted.

I think things like medical services, education fees, electricity and waters should be exempted. Those items that the Government are subsidizing should be exempted too like rice, sugar, flour, petrol and basic necessities etc. Because what is the point subsidizing at one end next taxes us back.

Is this a new tax?
Yes for Malaysia. We have the sales tax & service tax. But on all good and services this is some thing new. Others countries have them already Japan, Singapore, Thailand, Australia, UK, Europe and many more.

Is it Good for the Country?
Yes, it collect their tax more efficiently every time you spend. Lessen trouble to audit and check on those escaping taxes. Unless you are not spending what you earn. Ha ha ha..