Goods and Services Tax (GST) is one of the most important areas of accounting for GST-registered businesses in Singapore. Although businesses collect GST from customers and pay GST to suppliers as part of their everyday transactions, GST should not normally be treated in the same way as ordinary business revenue or expenses.

Instead, GST collected and GST paid generally need to be separately recorded in the accounting system so that the business can determine the amount payable to, or potentially refundable from, the Inland Revenue Authority of Singapore (IRAS).

Understanding how to treat GST in accounting is therefore important for business owners, accountants and bookkeepers.

For a typical GST-registered Singapore business, the basic concept is relatively straightforward:

Output tax is the GST that a GST-registered business charges and collects on its taxable supplies.

Input tax is the GST incurred on business purchases and expenses, subject to the relevant conditions for claiming it.

At the end of the GST accounting period, the business generally compares its output tax with its claimable input tax.

If output tax exceeds claimable input tax, the difference is generally payable to IRAS.

If claimable input tax exceeds output tax, the business may have a GST refund position, subject to IRAS requirements and review.

However, actual GST accounting can become considerably more complicated once a business deals with zero-rated supplies, exempt supplies, imported services, disallowed input tax, credit notes, bad debts and other adjustments.

This guide explains how GST is generally treated in accounting in Singapore and provides practical examples of the journal entries businesses may encounter.

What Is GST in Singapore?

GST is a broad-based consumption tax imposed on the import of goods and most supplies of goods and services in Singapore.

Singapore’s prevailing GST rate is 9%, which has applied since 1 January 2024.

A GST-registered business generally charges GST on its taxable supplies unless a particular transaction is zero-rated or otherwise treated differently under Singapore’s GST rules.

For accounting purposes, one of the most important concepts to understand is that GST collected from customers is generally not additional income belonging to the business.

The business is collecting the tax as part of Singapore’s GST system.

Similarly, GST incurred on purchases may potentially be recoverable as input tax where the relevant conditions are satisfied.

Therefore, accountants generally separate GST from the underlying revenue and expense amounts.

Output Tax vs Input Tax

The easiest way to understand GST accounting is to separate GST into two categories.

Output Tax

Output tax is GST that a GST-registered business charges on its taxable supplies.

Suppose a GST-registered Singapore company sells consulting services for:

Service fee: $10,000
GST at 9%: $900
Total invoice: $10,900

The company’s accounting records should generally distinguish between:

Revenue: $10,000

and

Output GST: $900

The $10,900 received from the customer should not simply be recorded as $10,900 of revenue.

The $900 represents GST collected.

Input Tax

Input tax generally refers to GST incurred by a GST-registered business on business purchases and expenses.

Suppose the same company purchases equipment for:

Equipment: $5,000
GST: $450
Total: $5,450

Where the $450 satisfies the requirements for an input tax claim, the company may record the cost of the equipment separately from the recoverable GST.

This distinction is fundamental to proper GST accounting.

How to Record GST on Sales

Consider a simple example.

ABC Pte Ltd provides services to a Singapore customer.

Selling price before GST: $20,000
GST at 9%: $1,800
Invoice total: $21,800

When the invoice is issued, a simplified journal entry could be:

Debit: Accounts Receivable — $21,800

Credit: Sales Revenue — $20,000

Credit: GST Output Tax — $1,800

The company therefore recognises only $20,000 as revenue.

The $1,800 GST is recorded separately as GST collected.

When the customer subsequently pays the invoice:

Debit: Bank — $21,800

Credit: Accounts Receivable — $21,800

The GST liability has already been recognised when the underlying transaction was recorded according to the applicable accounting and GST treatment.

Why GST Collected Should Not Normally Be Recorded as Revenue

This is a common bookkeeping mistake.

Imagine a company invoices customers a total of $109,000, comprising:

Sales before GST: $100,000

GST: $9,000

Total invoiced: $109,000

If the business records the entire $109,000 as revenue, its sales figure becomes overstated.

The company’s actual revenue from those transactions is $100,000.

The additional $9,000 is GST collected.

This matters because inaccurate GST treatment can distort:

• Revenue
• Gross profit
• Profit margins
• Management accounts
• Financial statements
• GST balances
• Tax calculations

Proper accounting software should generally separate the GST component automatically when transactions are coded correctly.

How to Record GST on Purchases

Now suppose ABC Pte Ltd purchases office equipment.

Equipment cost: $10,000
GST: $900
Total supplier invoice: $10,900

Assuming the GST is fully claimable and the transaction is otherwise appropriately accounted for, a simplified entry could be:

Debit: Equipment — $10,000

Debit: GST Input Tax / GST Recoverable — $900

Credit: Accounts Payable — $10,900

When the supplier is paid:

Debit: Accounts Payable — $10,900

Credit: Bank — $10,900

The $900 is therefore not included in the equipment’s accounting cost in this simplified example because it is being accounted for separately as recoverable GST.

However, this assumes that the GST is actually claimable.

That point is important.

Not All GST Paid Can Automatically Be Claimed

One of the biggest GST accounting mistakes is assuming:

“If my supplier charged GST, I can claim it.”

That is not always correct.

Input tax claims are subject to Singapore’s GST rules.

Among other considerations, the expenditure generally needs to be for the purpose of the business, and the business needs to satisfy the applicable documentation and input tax claiming conditions.

There are also categories of expenses for which input tax claims are specifically restricted or disallowed.

Businesses should therefore distinguish between:

GST incurred

and

GST that is actually claimable as input tax.

They are not always identical.

Accounting for Non-Claimable GST

Suppose a business incurs an expense of:

Expense before GST: $1,000
GST: $90
Total: $1,090

Assume, for illustration, that the GST is not claimable.

Instead of recording:

Expense: $1,000
Recoverable GST: $90

the non-recoverable GST would generally form part of the relevant expense or asset cost, depending on the nature of the transaction and applicable accounting treatment.

A simplified entry might therefore be:

Debit: Expense — $1,090

Credit: Accounts Payable / Bank — $1,090

The important principle is that the company should not create a recoverable GST balance for GST it is not entitled to claim.

Calculating GST Payable to IRAS

Suppose during a GST accounting period a company has:

Output tax collected: $18,000

Claimable input tax: $11,000

The net GST position is:

$18,000 − $11,000 = $7,000

The company would generally have $7,000 of net GST payable, subject to any other applicable adjustments.

Conceptually:

Output GST − Claimable Input GST = Net GST

If the result is positive, there is generally GST payable.

If the claimable input tax exceeds output tax, there may instead be a refundable amount.

For example:

Output tax: $8,000

Claimable input tax: $12,000

Difference:

$8,000 − $12,000 = -$4,000

Subject to the applicable GST rules and IRAS verification, the business may have a $4,000 refund position.

Is GST an Asset or Liability?

GST can result in either an asset or liability depending on the company’s position.

GST Output Tax

GST collected from customers generally contributes towards an amount owed to IRAS.

It therefore has the characteristics of a liability until appropriately settled or offset.

GST Input Tax

Claimable GST incurred on purchases can represent an amount recoverable or available to offset against output tax.

Depending on the accounting system, businesses may maintain separate input and output GST accounts or use a consolidated GST control account.

At the end of the GST period, these balances are reconciled to determine the company’s net position.

Example of a Complete GST Accounting Cycle

Consider ABC Trading Pte Ltd.

During one GST accounting period, it records the following transactions.

Sales

Taxable sales excluding GST: $200,000

Output GST: $18,000

Total customer invoices: $218,000

Purchases and Expenses

Claimable purchases excluding GST: $100,000

Claimable input GST: $9,000

Total: $109,000

The company therefore has:

Output GST: $18,000

Less input GST: $9,000

Net GST payable: $9,000

The $9,000 is not an additional operating expense arising simply because the GST return is filed.

The business collected $18,000 from customers and incurred $9,000 of claimable GST through qualifying business purchases.

The net difference is settled through the GST system.

GST and the Profit and Loss Statement

A properly accounted-for GST-registered business will generally record its income and qualifying expenses net of recoverable GST.

For example:

Customer invoice: $10,900

Revenue recognised: $10,000

Output GST: $900

Similarly:

Supplier invoice: $5,450

Expense: $5,000

Claimable input GST: $450

This prevents the GST component from artificially inflating both revenue and expenses.

However, where GST incurred is not recoverable, it may form part of the relevant expense or asset cost.

This distinction is important when preparing financial statements.

GST and the Balance Sheet

The balance sheet may contain a GST-related receivable or payable.

For example, if the business has collected more output GST than it can offset with claimable input GST, the balance sheet may show a GST liability.

If the business has more claimable input GST than output GST, there may be a GST receivable or recoverable balance, subject to the relevant circumstances.

The balance should reconcile with the company’s GST return.

If the accounting ledger says the business owes $20,000 of GST but its GST return says $14,000, the difference needs to be investigated.

Why GST Reconciliation Is Important

A good accounting process should include regular GST reconciliation.

The accountant or bookkeeper should compare:

• GST control accounts
• Sales records
• Purchase records
• Tax invoices
• Credit notes
• Debit notes
• GST returns
• Previous GST balances
• Payments to or refunds from IRAS

The objective is to ensure that the accounting records agree with the GST return.

Reconciliation can identify issues such as:

• Duplicate input tax claims
• Missing sales invoices
• Incorrect GST codes
• GST claimed on disallowed expenses
• Incorrectly treated zero-rated transactions
• Credit notes not recorded
• Wrong accounting periods
• GST payments posted incorrectly

Leaving these differences unresolved can make future accounting periods increasingly difficult to reconcile.

Standard-Rated Supplies

Most ordinary taxable supplies made locally by GST-registered businesses are standard-rated.

At the prevailing 9% GST rate, a $1,000 standard-rated supply generally results in:

Value before GST: $1,000

GST: $90

Total: $1,090

The $90 should be separately recorded as output GST rather than revenue.

Zero-Rated Supplies

A zero-rated supply is still a taxable supply, but GST is charged at 0%.

Certain exports of goods and qualifying international services can potentially be zero-rated where the applicable conditions are satisfied.

Suppose a qualifying transaction has a value of $20,000.

Revenue: $20,000

GST charged: $0

The transaction may therefore still need to be appropriately classified for GST reporting even though no GST is collected from the customer.

Businesses should not assume that every transaction involving a foreign customer automatically qualifies for zero-rating.

The relevant GST conditions need to be considered.

Exempt Supplies

Exempt supplies are different from zero-rated supplies.

Certain financial services and the sale or lease of residential properties, among other prescribed transactions, can fall within GST exemption rules.

The distinction between exempt and zero-rated supplies can be important because it may affect the business’s ability to claim input tax.

A company making both taxable and exempt supplies may need to consider input tax attribution and partial exemption rules.

This can become significantly more complicated than ordinary GST bookkeeping.

Out-of-Scope Transactions

Some transactions may fall outside the scope of Singapore GST.

Businesses should therefore avoid using the same GST code for every transaction.

Modern accounting systems commonly contain codes for categories such as:

• Standard-rated sales
• Zero-rated sales
• Exempt sales
• Out-of-scope transactions
• Standard-rated purchases
• Purchases with non-claimable GST

Correct coding is important because these codes can affect the GST return generated from the accounting system.

How to Treat GST on Fixed Assets

Suppose a GST-registered business purchases machinery for:

Machinery: $100,000

GST: $9,000

Total: $109,000

Assuming the $9,000 is fully claimable, the accounting records may generally recognise:

Fixed asset: $100,000

Recoverable GST: $9,000

Payable: $109,000

The company would therefore generally depreciate the $100,000 asset cost rather than $109,000, assuming the GST is fully recoverable and the applicable accounting treatment supports this.

If the GST is not recoverable, however, the accounting cost of the asset may include the non-recoverable GST.

GST on Credit Notes

Credit notes are another area requiring proper GST treatment.

Suppose a company originally invoices:

Sale: $10,000

GST: $900

Total: $10,900

The company subsequently gives the customer a $1,000 reduction plus GST.

Credit note:

Reduction: $1,000

GST adjustment: $90

Total credit: $1,090

The business needs to record both the reduction in revenue and the corresponding GST adjustment.

Failing to record the GST portion correctly could cause the GST control account and GST return to become inaccurate.

GST and Bad Debts

Bad debts can create additional GST considerations.

A business may have accounted for output tax on a taxable supply but subsequently fail to collect payment from the customer.

Singapore’s GST framework contains provisions concerning bad debt relief where the relevant conditions are satisfied.

Businesses should not simply reverse GST whenever a customer fails to pay.

The applicable conditions and timing requirements should be checked before making a GST adjustment.

GST on Imports

Imported goods also involve GST considerations.

Import GST may be paid or accounted for when goods enter Singapore, subject to the relevant schemes and circumstances.

For a GST-registered business, qualifying import GST may potentially be claimable as input tax if the relevant requirements are satisfied.

Businesses importing substantial amounts of inventory should ensure that import documentation is properly maintained and reconciled to their accounting records.

Imported Services and Overseas Suppliers

GST accounting has become more complex as Singapore businesses increasingly purchase software, advertising, cloud services, consulting and other services from overseas suppliers.

Depending on the circumstances, rules concerning imported services, reverse charge or overseas vendor registration may become relevant.

A business should therefore not assume that an invoice from an overseas supplier automatically has “no GST implications.”

The appropriate treatment depends on the nature of the transaction and the business’s circumstances.

GST Registration and Accounting

Businesses also need to distinguish between companies that are GST-registered and companies that are not.

GST-Registered Business

A GST-registered business generally charges GST on its taxable supplies and may claim qualifying input tax, subject to the relevant requirements.

Non-GST-Registered Business

A non-GST-registered business generally cannot simply charge GST on its sales.

It also generally cannot claim input tax in the same way as a GST-registered business.

If a non-GST-registered company purchases office equipment for $10,000 plus $900 GST, the $900 will generally form part of the company’s cost because it is not recoverable as input tax through a GST return.

This distinction is very important when setting up accounting records.

Common GST Accounting Mistakes

Businesses should watch for several recurring errors.

Recording GST-Inclusive Sales Entirely as Revenue

If a $10,900 invoice consists of $10,000 revenue and $900 GST, recording $10,900 as revenue overstates sales.

Claiming Every GST Amount as Input Tax

Not every GST amount appearing on an invoice is necessarily claimable.

Using the Wrong GST Code

Incorrect transaction coding can flow directly into an incorrect GST return.

Failing to Reconcile GST Accounts

Differences between the accounting system and GST return should be investigated rather than carried forward indefinitely.

Claiming GST Without Proper Supporting Documents

Businesses should maintain the documentation required to support input tax claims.

Confusing Zero-Rated and Exempt Supplies

Both may result in no GST being charged to the customer, but their GST treatment is fundamentally different.

Forgetting Adjustments and Credit Notes

GST accounting does not end when the original invoice is recorded. Subsequent adjustments also need to be considered.

Should SMEs Use Accounting Software for GST?

For most GST-registered SMEs, accounting software can substantially simplify GST administration.

Properly configured software can:

• Separate GST from revenue
• Record input GST
• Record output GST
• Apply different GST codes
• Maintain transaction histories
• Generate GST reports
• Assist with reconciliation
• Provide an audit trail

However, software does not replace accounting knowledge.

If the wrong GST code is selected, the software may accurately calculate the wrong treatment.

Good bookkeeping therefore involves both an appropriate accounting system and people who understand how transactions should be classified.

Frequently Asked Questions About GST Accounting

Is GST Collected Considered Revenue?

Generally, no. Output GST collected on behalf of the GST system should normally be separately accounted for rather than recognised as business revenue.

Is GST Paid an Expense?

Not necessarily.

Where GST incurred is claimable as input tax, it is generally recorded separately as recoverable GST rather than as part of the expense.

Where GST is non-recoverable, it may form part of the relevant expense or asset cost.

What Is Output GST?

Output tax is GST charged by a GST-registered business on its taxable supplies.

What Is Input GST?

Input tax is GST incurred on business purchases and expenses. Whether it can actually be claimed depends on the relevant GST rules and conditions.

What Happens When Output GST Is Higher Than Input GST?

The difference generally results in net GST payable to IRAS, subject to applicable adjustments.

What Happens When Input GST Is Higher Than Output GST?

The business may have a net GST refund position, subject to the relevant rules and IRAS review.

What Is Singapore’s GST Rate?

Singapore’s prevailing GST rate is 9%, effective since 1 January 2024.

Should GST Appear in the Profit and Loss Account?

Recoverable GST generally does not form part of revenue or expenses. Non-recoverable GST, however, may form part of the relevant expense or asset cost.

Getting GST Accounting Right in Singapore

Understanding how to treat GST in accounting starts with one central principle:

GST should generally be separated from the underlying income or expense where the GST is collected or recoverable.

For a GST-registered business, output GST collected from customers is generally recorded separately from revenue.

Similarly, qualifying input GST incurred on business purchases is generally recorded separately from the underlying expense or asset.

The business then determines its net GST position by comparing output tax against claimable input tax, together with any relevant adjustments.

In a simple business with straightforward local sales and purchases, GST accounting can be relatively manageable.

However, complexity increases when the company deals with:

• Imports
• Exports
• International services
• Exempt supplies
• Partially exempt activities
• Non-claimable input tax
• Credit notes
• Bad debts
• Overseas suppliers
• Reverse-charge transactions
• Complicated business structures

This is why accurate bookkeeping and regular GST reconciliation are important.

A GST return should not simply be prepared as a separate exercise every quarter without reference to the company’s accounting records. Ideally, the GST return should flow from properly maintained accounts, with the relevant GST balances reconciled before submission.

For Singapore SMEs, engaging an experienced accounting services provider can help ensure that transactions are consistently classified and that GST balances can be reconciled to the underlying accounting records.

Koh Management Pte Ltd provides accounting, bookkeeping, GST and tax-related support alongside corporate secretarial and company incorporation services for Singapore businesses.

For business owners, proper GST accounting is not simply about filing a GST return on time. It is about maintaining reliable financial records throughout the year so that revenue, expenses, assets, liabilities and GST balances accurately reflect the company’s transactions.

When GST is recorded correctly from the beginning, GST reporting becomes easier, financial statements become more reliable and management gains a clearer understanding of the company’s actual financial performance.