Customs: Local councils better off with GST

PUTRAJAYA: Local councils are much “better off” under the Goods and Services Tax (GST) system compared to before April 1 when the Sales and Services Tax (SST) was in place, said Customs Department GST director Datuk Subromaniam Tholasy.

“According to Section 64 of the GST Act, the tax is not applicable to supply of goods or services made by the Federal Government or a state government.

“For local councils, supplies related to regulatory or enforcement functions are not subject to GST.

“Only commercial activities such as rental of halls or commercial premises are subject to it.

“However, local councils can now file input tax claims on acquisition of goods and services related to regulatory or enforcement functions, which they were not able to during the SST era. Local councils are better off now as they can claim tax on purchases of vehicles, lawyer fees, security services and such.

“The cost no longer becomes a burden to them,” said Subromaniam at a joint press conference with the Domestic Trade, Cooperatives and Consumerism Ministry at the Treasury building here yesterday.

Last weekend, the Johor government announced that its local councils would absorb all GST charge so the people would not have to pay for it.

The Penang government also announced yesterday it would follow suit and absorb all GST charges on local council services.

Subromaniam said his department would meet with local councils in Johor to explain the GST to them in detail.

“The local councils actually receive special treatment that is not enjoyed by many business entities.

“But maybe they are not aware of it, so we will engage with them to explain what they are entitled to under the GST,” said Subromaniam.

On another matter, Subromaniam said the disabled could enjoy GST exemption for purchases of disability aid such as wheelchairs and hearing aids.

The purchases however must be made through a private charitable organisation for the disabled and authorised by the association’s head.

“If a disabled person buys a wheelchair, artificial limbs or hearing aid through an organisation, they can be exempted from the GST.

“The organisation must be registered with the Welfare Department and the purchase must be authorised by the head,” said Subromaniam.