Chandra Mohan [Managing Director]
Founder / Senior Audit Partner / FCA [Singapore] / FCCA / CPA [Aust] / MBA
Published 29 September 2025
GST Compliance Made Simple: 2024 Construction Industry Guide for Bookkeepers, Accountants & SME Directors
Stay up-to-date with Singapore’s latest GST rules for construction – clear steps and practical checklists for small business finance teams.
Clear, simple rules with a monthly checklist. Based on IRAS e‑Tax Guide “GST: Construction Industry (Fourth Edition, 12 Sep 2024).
Table of Contents
- Who should use this guide
- Core GST rules at a glance
- Timing and invoicing (what triggers GST)
- Counter supplies and “back charges” (do not net off)
- Deposits and advances
- Suspension, damages and settlements
- Reimbursements vs disbursements (principal vs agent)
- Workers’ dormitories (WD)
- Monthly GST checklist
Who should use this guide
| Topic | What this means |
| Industry roles | Developers, main contractors and sub‑contractors (including specialists like plumbers, electricians, painters, bricklayers). |
| Types of supplies | Construction, alteration, repair, maintenance and demolition of buildings or civil engineering works. |
Core GST rules at a glance
| Topic | Simple rule |
| Work in Singapore | Charge GST on all construction supplies for both residential and non‑residential projects carried out in Singapore. |
| Work overseas | Do not charge GST on construction directly connected with land outside Singapore; related services can be zero‑rated under Section 21(3)(e).
Goods kept outside Singapore are out‑of‑scope, or zero‑rated if exported from Singapore. |
| Progress payments (time of supply) | Account for GST at the earlier of:
(a) payment received, or (b) invoice issued. If payment is received first, issue the invoice within 30 days |
| Retention sums (time of supply) | Account for GST at the earlier of: (a) retention received, or (b) invoice issued for the retention. |
| Gross vs net billing | When you supply both goods and services, charge GST on the full (gross) contract value.
Do not net off materials provided by the other party. |
| Deposits | Charge GST on fees for tender/contract documents and on advance payments used to offset future bills.
Do not charge GST on true security deposits (e.g., banker’s guarantees). |
| Compensation, damages, settlements | Pure compensatory payments (e.g., liquidated damages for delay) are not subject to GST; if a payment is for taxable work (e.g., rectification performed), charge GST. |
| Recoveries | Reimbursement (you acted as principal): charge GST.
Disbursement (you paid purely as agent): do not charge GST. |
| Workers’ dormitories (WD) | Furniture/fittings and services (meals, laundry, cleaning, security, facilities maintenance) are taxable.
Split lump‑sum charges and apportion input tax. |
Timing and invoicing (what triggers GST)
| Item | Rule |
| Time of supply (general) | Earlier of payment received or invoice issued (an invoice includes documents that serve as a bill for payment, e.g., a debit note). |
| Payment before invoice | If you receive payment first, issue the invoice within 30 days of receiving payment. |
| Retention sums | Earlier of receipt of retention, or date you issue an invoice for the retention. |
| Letters of claim | Not a tax invoice. Issue a tax invoice only after the architect certifies the amount.
Keep the certificate with the tax invoice. |
| Adjustments after certification | Use a credit note (reduce) or an additional tax invoice (increase) to correct GST when the certified amount changes. |
Counter‑supplies and “back charges” (do not net off)
| Scenario | Correct GST treatment |
| You supply goods + services; other party gives you some materials | Each party invoices on their own gross supply. No netting off.
You charge GST on your full contract (goods + services). The other party charges GST on materials they supplied to you. |
| Example 4A [see the guide] | Main contractor (MC) supplies bricks $8,000 to sub‑contractor (SC);
SC’s contract for bricks + brick walls is $15,000.
It is wrong for SC to charge GST only on the net $7,000 [$15,000 -$8,000] |
| Example 4B | If SC is contracted only to build brickwalls (services) at $7,000, SC invoices $7,000 + GST (services only). |
Deposits and advances [see the guide to examples]
| Payment type | GST treatment |
| Tender/contract documents fee | Charge GST (sale of documents) |
| Advance payment used to offset future bills | Charge GST when received (time of supply rule) |
| Security deposit (e.g., banker’s guarantee) | No GST (no supply) |
Suspension, damages and settlements
Payments received as compensation for suspension of work or for damages (such as liquidated damages for delay or breach of contract) are generally not subject to GST, as they are considered compensatory in nature.
However, if a payment relates to actual work performed or rectification services provided, GST must be charged on that amount. It is important to clearly differentiate between compensation (no GST) and payments for taxable supplies (GST applies), and to maintain proper documentation to support your GST treatment if reviewed by IRAS.
| Situation | GST treatment |
| Suspension compensation | No GST if it compensates you for loss/costs due to suspension. If the payment is for work already done, charge GST. |
| Liquidated damages for delay | Not subject to GST (compensatory) |
| Rectification by another contractor, then cost recovered | The rectification is a taxable supply; charge GST on the recovery. The original contract remains fully taxable. |
| Compensation only, no rectification done | Compensation is not subject to GST; the original construction supply stays fully taxable. |
Reimbursements vs disbursements (principal vs agent)
A reimbursement is when you recover costs as a principal (in your own name), and you must charge GST on the recovery. A disbursement is when you pay on behalf of someone else as their agent (the obligation is theirs), and no GST is charged on the recovery. If you treat a reimbursement as a disbursement (or vice versa), you could under- or over-account for GST, leading to errors in your tax filings.
| Case | What to check | GST treatment |
| Reimbursement (you are principal) | Supplier invoiced you in your name; you contracted in your own capacity. | Your recovery is a taxable supply – charge GST, even if your original purchase had no GST (e.g., non‑GST‑registered supplier). |
| Example [see the Guide] | Main contractor buys materials from a non‑GST supplier for $1,000 (invoice in main contractor’s name), then recovers cost from sub‑contractor. | Main contractor must issue a tax invoice and charge GST on the recovery (it is a separate supply). |
| Disbursement (you are agent) | You paid on behalf of your customer; obligation is your customer’s (e.g., permit in their name). | Do not charge GST on the recovery (disbursement). |
Workers’ dormitories (WD)
Workers’ dormitories (WD) are often provided by construction companies to house their workers and subcontractors’ workers near project sites. This arrangement helps ensure workers have safe, accessible, and regulated accommodation, supporting project efficiency and compliance with local welfare requirements. In addition to basic lodging, dormitories may include services such as furniture, meals, laundry, and cleaning.
| Item | Treatment |
| Bare premises (rental) | Exempt from GST |
| Furniture and fittings; services (meals, laundry, cleaning, security, facilities maintenance) | Taxable – charge GST |
| Lump‑sum WD charge |
|
| Input tax | Input tax directly for exempt supplies is not claimable.
Common/residual input tax used for both taxable and exempt supplies must be apportioned. |
| Item | Details |
| IRAS contact | Goods & Services Tax Division, IRAS, 55 Newton Road, Singapore 307987; Tel: 1800 356 8633; Email: [email protected] |
| Edition and updates | Fourth Edition published 12 Sep 2024; 22 Jul 2024 inserted Workers’ Dormitories section; 12 Sep 2024 editorial updates to paragraphs 1, 2, 4, and Examples 4A/4B [Source] |
Monthly GST checklist for construction SMEs Tick each box monthly to stay compliant
[ ] Certification and Invoicing
Architect’s certificate received? Issue tax invoice for the certified amount. File the certificate with the invoice (letters of claim are not tax invoices).
[ ] Time of Supply
For each project, confirm GST was accounted for at the earlier of payment received or invoice issued. If payment arrived first, ensure the invoice was issued within 30 days.
[ ] Retention
Track retention invoices and receipts. Account for GST at the earlier of invoice for retention or receipt of retention.
[ ] Back Charges/Counter‑Supplies
If materials were provided by/to another party, confirm both parties issued tax invoices on their gross supplies (no netting off).
[ ] Deposits and advances
Charge GST on tender/contract document fees and on advance payments that offset future bills. Do not charge GST on security deposits.
[ ] Suspension/Damages/Settlements
Mark each receipt as compensation (no GST) or consideration for work (GST applies). For rectification, ensure both sides account for GST correctly.
[ ] Recoveries
For each recovery, decide if it’s a reimbursement (principal – charge GST) or a disbursement (agent – do not charge GST). Check whose name is on the supplier invoice.
[ ] Workers’ Dormitories
Split lump‑sum charges into exempt (premises) and taxable (furniture/fittings/services). Apportion input tax and keep your workings.
[ ] Overseas Jobs
For work tied to land outside Singapore, confirm no GST on the construction. Zero‑rate eligible services under s21(3)(e). Treat goods as out‑of‑scope if kept overseas or zero‑rated if exported.
[ ] Records
Keep architect certificates, tax invoices, credit notes/additional invoices for changes, and WD apportionment workings for audit.
Please tailor this checklist to suit your company’s specific needs.
Ensure your business stays compliant and minimizes GST risks.
Companies should review their contracts, apply GST rules correctly, and keep clear records as required by IRAS. By following best practices and seeking advice from GST professionals, you can confidently manage your tax obligations and reduce legal and financial exposure.
For enquiries about GST, bookkeeping, or audit services, contact us:
📞 Call: +65 9144 1840
📧 Email: [email protected] or [email protected]
Our dedicated team is ready to assist you with GST assessments, accurate bookkeeping, timely audit support, and full IRAS compliance. Let us help you keep your construction business on track with confidence.
Disclaimer:
The information provided in this article is for general guidance only and reflects the writer’s understanding of the IRAS e-Tax Guide “GST: Construction Industry (Fourth Edition, 12 Sep 2024).” It does not constitute professional advice. Readers are strongly encouraged to consult qualified professionals, such as a company secretary, lawyer, tax consultant, or auditor, for advice tailored to their specific circumstances. If in doubt, please also contact the Inland Revenue Authority of Singapore (IRAS) directly at [email protected] or 1800 356 8633.
