Monday, 6 April 2015

Understanding GST Tax Codes - Part 1

This is a follow-up on an earlier article entitled Knowing the 23 Tax Codes. Many asked why are tax codes important. This is because the accuracy of the figures in the GST-03 return that you submit to the Royal Customs Malaysia (RMC) on monthly or quarterly basis relies on the tax codes you punched into your accounting system. For example, tax code TX refers to goods and/or services purchased from GST registered suppliers and eligible to claim input tax credit. Then system will then post this figure to item 6(a) and 6(b) of you GST-03 form.

Let's  look at the first tax code for Purchase


This tax code refers to goods and/or services purchased from GST registered suppliers. The goods or services are used or are to be used for the purposes of any business carried on or to be carried on by the taxable person.

Purchase includes purchase of raw materials, trading goods, direct overheads such as electricity, transport, water, and indirect overheads such as rental, stationery, domestic air ticket and include purchase of fixed assets (capital goods) such as lorry, machine, office equipment.

Source document: Your supplier's tax invoice.

DescriptionDr.Cr.Tax Code
Local credit purchase with GSTPurchases

GST - InputTX
Trade Payables
Local cash purchase with GSTPurchases
GST - InputTX
Bank / Cash
Expenses with GSTExpenses - Rental
GST - InputTX
Bank / Cash
Purchase of assets with GSTAssets

GST - Input TaxTX


Use this tax code if you have purchased goods and services from non-GST registered supplier/ trader.

Source document: Your supplier's invoice. Non-GST registrants are NOT ALLOWED to issue tax invoices. It is an offence.

DescriptionDr.Cr.Tax Code
Expenses from local non-GST registrantExpensesNR

Trade Payables - NR1

Part 2: Purchase of imported goods and zero-rated purchase

Your turn to comment or suggest ..... :)

The materials and information contained here are for general information based on our understanding of the GST position under current GST legislation and the related practice thereof, all of which are subject to change, possibly on a retrospective basis.  We are not obligated to update these materials or information should there be any changes in future.

Independent professional advice should be obtained on any GST matters as the consequences / implications may differ depending on facts and circumstances of each case.

No part of these materials and information may be disclosed to third parties or copied, reproduced or transmitted by any means, extracted, quoted or included in any other document or communication without our prior consent.

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