Wednesday, 6 May 2015

Editor's Pick - How to save from GST

It has already been more than one month since the implementation of GST, what does this mean to consumers? Extra 6% tax on whatever we purchase (well... most of it). Here are the top 5 editor's picks on how to save from GST.

1. Avoid outlets with service charge

Being Malaysian, we love to eat. There are so many great food and beverage (F&B) outlets out there. But with the recent GST implementation, many of the  F&B outlets are required to charge the 6%. However, there are some restaurants out there that charge an additional 10% service charge.

If your bill comes up to RM100, you are being charged 10% on the RM100, and on top of that you are charged GST of 6%! Therefore, your total bill would come to RM116.60!

As a consumer, we are entitled to ask the outlets whether they charge service charge. If they do, then there's a choice to have your meal elsewhere.

2. GST absorbing outlets

Some of the outlets are kind enough to ease the consumer's burden by absorbing the 6% GST rather than passing it on to consumers.

These outlets include restaurants, furniture shops, etc. Although they would generally mention in their advertisements that they'll absorb the GST, but the actual fact is that they lower the cost of the goods and charge GST upon it. So for a meal that costs RM10 before GST for instance, costs the same after GST, because the actual cost of the meal being charged is RM9.44, plus 6% GST totalling back to RM10.

However, there are some restaurants that mention that they have simply replaced the Service Tax of 6% to GST of 6%, therefore, no change. With this treatment, some restaurants have actually reduced the price of some of their meals, such as KFC!

Regardless, whether the restaurant absorbs the GST or replaces the service tax, paying the same price before GST is still a good deal.

3. Shop for GST exempt items

The Malaysian government is pretty generous by introducing a wide range of GST exempted items; this includes lobster and many raw foods. However, the restaurant that is cooking it for you is offering you a service and thus, you'll still be charged GST on the service. Not only that, processed foods like sardines in tomato sauce will still be subject to GST.

So if you’re wondering what's the point of buying raw food if you can’t really eat it (I can’t imagine anyone who would eat raw fish or meat simply due to GST), you just bring it home and cook it! Not only can you improve and innovate with your cooking skills, you’ll able to impress your other half as well (or friends).

Another good news is that Ron95 petrol is GST-free, which is good news for most Malaysians. By the way, did you know that properties are GST exempt as well? (Then again, how often you buy properties?)

Finally, other things that are exempted include education fees and public transport so feel free to take the bus or train; you won’t be paying extras due to GST.

4. Prepaid vs Postpaid and making phone calls

For those that have been using postpaid for their mobile phones, there wont be any impact as the 6% GST replaces the Service Tax of 6% previously. However, for prepaid user they'll have to bear the additional 6% GST. Meaning, if you buy a reload top-up of RM10, you’ll have to pay additional 60 cents (at least for now). 

For 60 cents, you could actually get few minutes of talk time and send quite a number of Short Messaging Service (SMS). Yikes!!!

As an added advantage for postpaid users, you can get mobiles phones at much lower price or even for free. That's right! Free phone under contract for postpaid users.

Did you know that even phone calls will be taxed with GST. So to minimise your spending on phone calls and texting, why not try Internet/voice messaging applications? There are plenty to choose from, such as Skype, Viber and WhatApp. All you need to do is connect to WiFi, or use your data plan. Just try not to spend too long voice-calling if you’re on data, as you may finish up your monthly quota quickly.  

5. Shop overseas

Fancy a designer bag? Or always wanted to get that Prada purse you have been dreaming of? But to pay 6% on top of a RM5,000 (assuming) Prada handbag is RM300!

So to save that 6% of tax, why not consider shopping at neighbouring countries such as Singapore or Thailand. Of course these 2 countries charge GST, but as a tourist you are able to claim the GST back at the customs. Since the goods are not consumed in that country, you are not liable for their GST or Value Added Tax.

Having said that, do take note of the currency exchange rate. Would it be more feasible to buy in Malaysia? Or would it be more affordable to purchase overseas after the conversion rate.

So if you're planning a trip or know any friend who is travelling (ask for their help!), do consider purchasing that designer item you always wanted overseas instead.

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