Subsequent to the post, there was a clarification from a reader on the relevant Singapore laws. The reader also pointed me to an IRAS site. Thanks. (http://www.iras.gov.sg/irasHome/page.aspx?id=2166)
They have provided an example for the calculation for calculating GST. Example is provided below. Hence my post on incorrect tax calculation that included Service Charge is IN-CORRECT. Apologies for this inadvertent error.
Calculating GST on the supply
You may impose a service charge (usually at 10%) based on the price of goods and services that you provide. The service charge is subject to GST as it is part of the price payable for the goods and services provided. Therefore, the GST chargeable should be calculated based on the total price payable (inclusive of service charge).
Food & Beverage $100.00
10% Service Charge $ 10.00
7% GST ( on $110.00) $ 7.70
Total Price With GST $117.70
Original Article :
If you thought you can’t get cheated in Singapore, you are probably wrong. I experienced this today.
Had been to a restaurant in the afternoon. I never had the habit of looking at the bill ( receipt ) when payment was due in a restaurant. Normally would be in the company of friends and would not bother to look at the line items.
But a couple of days ago when I was sending off writer Jeyamohan he was talking about a service charge for a credit card purchase. I was dumbfounded as credit card transactions don’t attract service charge normally in Singapore.
That incident suddenly came to my mind and I paid some attention to the restaurant bill. There was a service charge of 10%. And on top of that there was a GST ( Goods and Service Tax ). GST was normal but what was not normal was that the GST was charged taking into account the Service Charge as well.
So I contested the bill. The counter sales person said that it was his fault not to have informed me of the service charge in advance. I told him that I was rather pleased with the service and hence didn’t mind paying the service charge. But what I didn’t want to pay was the GST even on the service charge. How could I be expected to pay a tax on a service charge?
The sales person was confused. ‘Sir, but we charge like this normally’, he said.
‘But’, I continued, ‘do you know that this is not legal?’.
‘The word ‘legal’ probably sounded the right bells and the bill was reversed. I paid SGD 2 less than the original bill amount.
My point is not to defame a restaurant. The restaurant is still one of the best in Singapore serving vegetarian folks like myself. Probably the restaurant didn’t know the rule.
But to be on the side of caution, let us be vigilant.
On a different note : How come they charge 10% flat ? Any pointer on Singapore law regarding this is welcome.
Dear Restaurateurs – It is okay to go behind profit. But don’t cheat. It leaves a bad taste even if the food is good.
P.S : I have removed the restaurant name from the receipt as my intention is not to defame them but to create an awareness.