Under the scope of Goods and Services Tax (GST) in Malaysia, supplies fall into 4 categories. They are, standard rated supplies, zero rated supplies, exempt supplies and supplies not within the scope of GST. Goods and Services that fall under each category predetermined by the Royal Custom Department of Malaysia.
Below is the explanation of each category.
1. Standard Rated Supplies
Standard rated supplies are referring to taxable goods and services, which are subject to a standard rate of 6%.
Any taxable person or company who is registered under GST requires to collect GST on behalf of the government on their sales of the supplies. The person or company is eligible to claim input GST credit on the business inputs in making the said supplies.
For the consumers, they can identify the standard rated supplies by looking at the receipt when making the purchase. Normally, standard rated supplies GST labelled with an “S”.
The examples of standard rated supplies are local supply of goods or services, supply of land and building for commercial and construction of all types of building.
2. Zero Rated Supplies
Zero rated supplies are referring to taxable goods and services, which are subject to a tax rate of 0%.
Within this category, taxable person or company who is registered under GST does not require to collect any GST on their sales. However, the said person or company is eligible to claim input GST credit on the business inputs in making the said supplies.
For the consumers, they can identify the zero rated supplies by looking at the receipt when making the purchase. Normally, zero rated supplies GST labelled with a “Z”.
The examples of zero rated supplies are goods such as basic food and utilities such as beef, rice, sugar, water for domestic use and first 200 units of electricity per months for domestic use.
3. Exempt Supplies
Exempt supplies are referring to goods and services, which are not subject to GST.
Within this category, taxable person or company who is registered under GST does not required to collect any GST on their sales nor eligible to claim input GST credit on the business inputs in making the said supplies.
For the consumers, they can identify the zero rated supplies by looking at the receipt when making the purchase. Normally, exempt rated supplies GST labelled with a “Z”.
The examples of exempt supplies are transport services, toll or highway and certain financial services.
4. Supplies not within the scope of GST
This category refers to supplies, which do not fall within the charging provision of the GST Act.
The example include non-business transactions, sale of goods from a place outside Malaysia to another place outside Malaysia as well as services provided by the Government sector.
Summary
| Type of Supplies | GST Rate | Input GST |
|---|---|---|
| Standard Rated | 6% | Claimable |
| Zero Rated | 0% | Claimable |
| Exempt | Not Charged | Not Claimable |
