GST – Clarification of Unauthorised Collection of GST

Ever wonder whether you can collect GST before your application is approved because you’d been told that IRAS would backdate your GST registration to the date when you first charged GST on your sales.

Under Singapore GST Act, only GST-registered businesses are allowed to charge GST on their sales.   The IRAS has recently clarified that they are aware that some businesses have been wrongly advised on this point, thinking that they can collect GST before their application for GST is approved because IRAS would backdate their GST registration to the date when GST was first charged on their sales.  This is incorrect. 

The IRAS do backdate the registration of businesses that are compulsorily required to register.  However, this backdating of GST registration does not in itself ratify the wrongful act of collecting GST before a business is registered for GST.  The business would still have committed an offence for the GST collected for the backdated period prior to IRAS’ backdating of its registration.

You should be aware that under the GST Act, it is a serious offence for businesses that are not GST-registered to charge and collect GST from their customers.  Offenders face a penalty of 3 times the tax wrongfully collected and a fine of up to $10,000..

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