9.01 Types of Supply
There are 3 main types of supply applied in Malaysia:-
1. Standard Rated Supply
- are goods and services that are charged GST with a standard rate. GST is collected by the businesses and paid to the government. They can recover credit back on their inputs. If their input tax is bigger than their output tax, they can recover back the difference.
Manufacturer (CLAIMS back *GST) --> Wholesaler (CLAIMS back *GST) --> Retailer (CLAIMS back *GST) --> Consumer (PAY *GST only)
* GST at 6%
http://gst.customs.gov.my/en/gst/Pages/gst_sr.aspx
2. Zero-Rated Supply
These are taxable supplies that are subject to a zero rate. Businesses are eligible to claim input tax credit in acquiring these supplies, and charge GST at zero rate to the consumer.
Manufacturer** --> Wholesaler** --> Retailer** --> Consumer (no need to pay *GST)
**Business claims tax paid on input at each stage of supply chain
Although there is no output tax on the supply business may incur tax on overhead expenses etc.
http://gst.customs.gov.my/en/gst/Pages/gst_zr.aspx
3. Exempt Supply
These are non-taxable supplies that are not subject to GST. Businesses are not eligible to claim input tax credit in acquiring these supplies, and cannot charge output tax to the consumer.
Medical Supplier (*GST charge to the bill) --> Private Hospital (no *GST charge to the bill)--> Consumer (no need to pay any *GST)
Note:
Medical service is an exempt supply, therefore Hospital cannot claim back GST on input.
* GST at 6%