GST Consumers and Supplies

In our consumption-crazed era, consumers are king in determining the success or failure of businesses, and governments worldwide use this to introduce consumption taxes. In Malaysia, we have Sales & Services Tax (SST) and Goods & Services Tax (GST) laws, although the latter was set to 0% in 2018 and effectively abolished.

However, we have explored in a previous blog the benefits of GST as a whole and it is no secret that GST has many benefits over SST. Experts are already predicting the return of GST to be imminent, therefore we as consumer should ready ourselves with the necessary information to prevent getting cheated by businesses who exploit naivety.

In this article, we will share which items are exempted from GST, which are taxable at zero rated, and which items are taxable at standard rate. We will also share how you can protect your interest as a consumer when faced with dishonest businesses.

Do be aware that the information here are subject to changes, therefore always consult Royal Customs Department Malaysia (RMC)’s website (www.customs.gov.my) for the latest list when GST is reimplemented.

Exempt supply

To consumers, exempt supplies are not allowed to have a GST component. This means that the merchant shouldn't be charge a GST figure on their receipt.

However, this does not mean the item is free of GST. As businesses are similarly subject to GST, and GST suffered by the business (input tax) in relation to the exempt item is not reclaimable, turning GST into a cost for the business.

If the business aims to preserve their profit figure, they will increase their prices equal to the GST amount; if the business maintains their profit margin percentages, they may even add a profit component on top of transferring the GST amount. This ultimately still means that consumers suffer, worst still is that consumers will not know how much they are paying for the business’s GST.

Of course, as it is a part of the GST system, not much can be done about it, so just know that these items may encounter that situation, as they are exempt items:

One more notable aspect of this are unregistered businesses under the GST system. They are not allowed to charge GST similar to businesses supplying the above-mentioned exempt items. Once again, the consumers suffer as they cannot see the GST component charged by these businesses. However, these businesses can be identified by the absence of their GST registration number being displayed prominently (which is a statutory requirement under GST law), despite them not solely selling exempt goods/services.