In Singapore’s GST framework, “input tax” refers to the GST your business pays on purchases — whether that’s buying goods or services from a GST-registered supplier, or importing goods and services into Singapore under the reverse charge mechanism.
The beauty of the system is that, as long as you meet the input tax claiming conditions, you can offset this GST against the GST you collect from customers. This way, only the value added at each stage is taxed — not the entire selling price each time goods or services change hands.
That said, there are important limits. Input tax tied to exempt supplies is generally blocked unless you qualify under the De Minimis Rule. And where a purchase benefits both taxable and exempt supplies, but you can’t easily split the cost, the GST claim has to be made on a proportionate basis.
When it comes to timing, the claim should match the accounting period of the date shown on your tax invoice, customer accounting tax invoice, simplified tax invoice, or import permit. You don’t have to wait until you make the sale to claim the tax back — purchases before an actual sale can still qualify, provided all conditions are met.
The net position — whether GST is payable to IRAS or refundable — comes down to a simple calculation: total output tax collected minus total input tax claimed.
Conditions for Claiming of ITC
Before you even think about making a claim, there’s a checklist to run through. To be eligible, you must ensure:
- You are GST-registered.
- The goods or services have been supplied to you, or you have imported them yourself.
- For local purchases, your claim must be backed by a tax invoice or customer accounting tax invoice addressed to your business, or a simplified tax invoice (where applicable).
- For imports, you need an import permit that names your business as the importer.
- The goods or services are used, or will be used, for business purposes.
- The input tax is linked to making taxable supplies — whether standard-rated, zero-rated, or out-of-scope supplies that would be taxable if made locally.
- Your claim is not prohibited under Regulations 26 and 27 of the GST (General) Regulations.
- You’ve taken reasonable steps to confirm the goods or services were not connected to a Missing Trader Fraud scheme — and your conclusion must be one a reasonable person would reach.
Along with the above, you need to keep the right supporting documents:
a) A tax invoice or customer accounting tax invoice in your business name; or
b) A simplified tax invoice for:
- Purchases (including GST) worth $1,000 or less;
- Entertainment expenses on food and drinks, regardless of value.
For the entertainment expenses, keep extra details: proof of payment, who was entertained, the purpose, and who incurred the cost. This concession has been in place since 1 February 2014 and applies only to food and drink. If your entertainment bill includes other items — for example, yacht rental — then a full tax invoice is still required.
Disallowed ITC
Some expenses are outright blocked from input tax claims under Regulations 26 and 27. These include:
- Benefits given to family members or relatives of your staff.
- Costs and running expenses on motor cars — whether owned, registered, or hired — for business or private use.
- Club subscription fees (including transfer fees) for sports or recreation clubs.
- Transactions involving betting, sweepstakes, lotteries, fruit machines, or other games of chance.
- Medical and accident insurance premiums for staff, unless legally compulsory under the Work Injury Compensation Act or under a collective agreement as defined by the Industrial Relations Act.
- Medical expenses for staff, unless:
a) They are compulsory under WICA or an IRA-covered agreement; or
b) For expenses incurred on or after 1 October 2021, the treatment is required due to a health risk linked to the nature of the work or work environment.
Why These Rules Matter
The ITC framework exists to keep GST fair and focused. Without these restrictions, GST could end up subsidising private perks, unrelated leisure activities, or even risky business arrangements.
Following the rules means your claims will hold up under review, and you’ll avoid the headache of penalties, interest, or drawn-out disputes with IRAS.
Final Thoughts
The GST input tax credit system in Singapore is designed to be fair — rewarding legitimate business costs while blocking claims that don’t directly contribute to making taxable supplies.
For businesses, the real challenge isn’t just knowing the rules, but building habits to follow them every time. That means checking invoices, confirming the business purpose, and keeping clear, accurate records.
Done right, ITC claims can significantly improve cash flow. Done carelessly, they can trigger audits or even penalties. By keeping compliance front of mind, you not only stay on the right side of IRAS but also keep your financial processes clean and efficient — a win for both your business and your peace of mind.
