Common GST Input Tax Claim Errors SMEs Must Avoid In Singapore

Goods and Services Tax (GST) can be a complex area for many SMEs in Singapore. While claiming input tax is a legitimate way to recover GST incurred on business expenses, mistakes are common and can lead to penalties, compliance issues, or rejected claims. To help SMEs stay compliant, we highlight some of the most frequent errors businesses make when claiming GST input tax—and how you can avoid them.

1. Missing or Invalid Tax Invoices

To claim GST input tax, your business must have a valid tax invoice issued by a GST-registered supplier. A proper tax invoice should include:

• Supplier’s name, address, and GST registration number

• Invoice date and unique invoice number

• Description of goods or services provided

• Total amount payable (excluding and including GST)

• Clearly stated GST amount charged

Submitting claims without these details, or using supplier invoices that do not meet IRAS’ requirements, will result in your input tax being disallowed.

2. Claiming GST on Non-Business Expenses

Input tax can only be claimed on expenses incurred for business purposes. Claims made on personal or non-business-related expenses, such as private car expenses or staff entertainment that does not meet IRAS criteria, are not allowed.

3. Claiming Before Payment Is Made

You must have made payment for the supply before claiming input tax. Attempting to claim GST before payment is completed can lead to rejection of the claim during audits.

4. Claiming GST on Blocked Input Tax

Certain expenses are specifically disallowed under GST rules, such as:

• Purchase and running expenses of non-commercial vehicles (e.g., passenger cars)

• Club subscription fees

• Medical expenses not mandated under the Employment Act

SMEs often mistakenly include these, only to face rejection.

5. Incorrect Apportionment of Input Tax

If your business makes both taxable and exempt supplies, you can only claim input tax attributable to your taxable supplies. SMEs commonly fail to properly apportion the input tax, resulting in over-claims and potential penalties.

6. Late Submission of GST Returns

Even if your input tax claims are accurate, late GST return submissions can trigger penalties and unnecessary IRAS scrutiny. Timely filing is critical to ensure compliance.

Final Thoughts

While GST input tax claims can improve your business cash flow, errors can quickly lead to complications and additional costs. SMEs in Singapore should put in place strong processes for record-keeping, verification of supplier invoices, and timely filing to stay compliant.

At CR Consultancy Pte Ltd, we help SMEs simplify GST compliance and avoid costly mistakes. If you’d like guidance tailored to your business, our team is here to support you.

Disclaimer: This article is for informational purposes only. It reflects current analyses and public sources and does not represent professional legal or investment advice. For specific guidance, please consult relevant authorities or economic advisors.