Goods that are not made in the country in which they are sold are termed as out-of-scope supplies. For instance, the supply of the goods sold in Singapore but are manufactured in some other country will be known as out-of-scope supply. The supplies of such goods are out of scope GST, and for that reason no GST is charged on them. Moreover, the firms involved in trading out-of-scope supplies are not required to mention such sales in their GST return as no GST is charged on them. Third party sales, sales of goods made in the free trade zone, sales of goods made overseas, private transactions, and Zero GST Warehouses are some of the examples of out-of-scope supplies.
What is the Goods & Services Tax (GST)?
GST or Goods & Services Tax is a value-added tax levied on most of the services and goods sold in a country for consuming in households. It is paid by the buyers of those goods and services, and the businesses selling those goods and services remit it to the government. In other words, the government gets revenue in the form of GST. It is an indirect tax charged on the cost of the goods and services sold under federal sales. The GST is added to the cost of goods and services purchased by a business which in turn is charged by the business from the customers on the value of the products bought by them. In this way, GST can also be known as VAT or Value-Added Tax.
What does GST apply to?
GST applies to all businesses as well as individuals buying goods and services for domestic consumption within the country. It is applied to the businesses involved in the field of commerce, trade, profession, manufacturing, vocational and similar other activities regardless of the frequency and volume of these activities. It is also applicable to the goods and services bought or sold for starting or closing a business. GST is also applied to the individuals including HUF, individuals, firms, company, AOP, LLP, societies, trusts and cooperative societies.
Agriculturists are kept out of the scope of GST. They may include people involved in horticulture, floriculture, rising of crops, sericulture, selling garden produce and grass, etc. But people involved in poultry farming, dairy farming, gathering fruits, stock breeding, rearing seedlings and rearing plants are not exempted from GST.
What are third country sales?
The sales of the goods supplied outside the country where they are produced to some other country are known as Third Party Sales. These products are also considered out-of-scope supplies. People involved in such supplies need not report about these goods in their GST return as GST is not applicable to them.
What are the sales of overseas goods made up of?
The sales of the goods manufactured in some other country are referred to as sales of overseas goods made. These goods are also considered as out-of-scope supplies and are not liable for any GST unless they are sold in the local market.
What are sales within the Free Trade Zone?
Certain areas are designated in many countries where no tax and duty is paid on the arrival and the storage of goods is produced in some other country. These areas are known as Free Trade Zones or FTZ. GST Act is not applicable to such goods as they are considered out-of-scope supplies.
What are Zero GST Warehouses?
Zero GST Warehouses are the warehouses where the goods imported from overseas are suspended before moving on to the GST zone. These warehouses have been developed by the Customs Department of Singapore under the Zero GST Warehouse Scheme. The GST Act will be applicable on these goods when they are sold in the local market. These warehouses can include the entire space of a premise or part thereof, like approved places or storage tanks, etc.
What are private transactions?
The transactions made between two entities without expecting any profit or payment from the recipient is known as non-business transactions or private transactions. For instance, on a weekend, if you help your neighbor in clearing his garden, then it will be termed as a private transaction as no money or expectation to get in return is involved in it. Such transactions are also known as out-of-scope supplies and hence not liable to pay any GST. People involved in such transactions should also not report about them while filing their GST return.