Two recovery options from April2025
The second edition dated30 January2026 explains an optional approved special method for licensed banks from1 April2025. Existing banks normally retain the industry fixed input-tax recovery rate (FITR), reviewed annually by licence category using MAS proxy statistics, unless opting for the special method. The special method attributes direct input and apportions residual input rather than applying one rate to all eligible costs. Seek approval before use; once approved and adopted, continue it in future years and do not revert to FITR. Non-business GST and input blocked under regulations26/27 remain excluded under either option.
GST groups, new banks and digital banks
All members of a registered GST group use the same option. Newly set-up banks are those licensed by MAS on/after1 April2025 and must obtain agreement for either FITR or special method; FITR can be requested if actual/intended activities and customer profiles are typical of incumbents with the same licence. Digital full/wholesale banks receive FITR only case by case on comparable typical profiles, not automatically because their licence is nominally similar.
One method for local and imported costs
FITR applies to all allowable local input and imported-service RC input. A bank retaining FITR cannot indefinitely keep the earlier RC interim direct-attribution option for imported services only. To continue direct attribution apply for a special method covering local and imported costs alike. The guide permits the historical interim arrangement for banks awaiting approved2025 implementation, but the2026-onward interim uses FITR for both.
Direct input versus residual input
Directly taxable input is fully claimable; directly exempt input is not. Costs supporting both or running the business are residual input tax (RIT) to apportion. Even direct input on exempt supplies to registered Singapore customers is not claimable: their special treatment applies only in the RIT ratio. General input conditions and valid evidence still apply. This distinction prevents classifying every exempt-to-registered supply as fully taxable for input purposes.
Longer-period adjustment and a single sector
A single-sector bank normally uses outputs: (taxable supply value + exempt value to registered Singapore persons)/total supplies. Exclude received customer-accounted supplies and imported RC services/LVG from both numerator/denominator. A fairer alternative requires approval. Recompute RIT annually on actual full-tax-year supplies or approved basis and adjust provisional claims. GST tax years start1 April, May or June according to prescribed periods; January–March quarter banks have April–March years. Prior-year figures may be provisional only with a current-year actual adjustment.
Sectoral method: separate allocation from recovery
Multiple sectors require sectoral recovery. Align sectors with genuine financial/management reporting, never manufacture them solely to improve recovery. First assign sector-specific RIT wholly to that sector; allocate shared RIT using agreed cost drivers; then apply each sector’s approved taxable/exempt recovery ratio. Retail, private banking, wealth, corporate lending, global markets and treasury are possible sectors. Examples1–2 accept existing financial or management segmentation including banking, wealth/investments and group functions. Allocation to a sector is not itself a tax claim.
Cost drivers and example3 headcounts
Outputs suit costs used proportionately to supplies in the same year; FTE headcounts suit staff-related costs where most work in one sector; direct costs suit largely directly allocated businesses; exclusive floor space suits occupancy-linked expenses. Different expenses may use different drivers. Example3 allocates S$80,000 payroll-service RIT:320 consumer staff,200 wealth staff and40 shared half-time give340/560 and220/560, allocated S$48,571.43 andS$31,428.57. Count full-time equivalents, not40 twice.
Example4 output allocation
S$1.4m operating-expense RIT serves corporate/institutional, asset management and investment sectors with supply values S$4m,6m and10m, total20m. Their use matches output proportions in the same year, allocating S$280,000,420,000 and700,000. Each allocated amount must still be multiplied by that sector’s own recovery ratio. Apply the calculated ratio as-is without rounding it before multiplying allowable RIT.
Four sector recovery methods
Outputs suit use proportional to values; transaction counts suit fairly uniform costs per trade regardless of value. Inputs-based ratios suit costs incurred in a different year from supplies with substantial directly attributable costs. Headcount/time suits identifiable staff effort with reliable records. Every ratio adds qualifying exempt-to-registered-Singapore activity to taxable activity, but the exempt supply itself remains exempt. Select a basis reflecting actual resource use, not whichever yields the largest claim.
Transaction counts and example5
Use (taxable transaction count + exempt transactions with registered Singapore counterparties)/all transactions. Example5’s global-markets securities/FX/derivatives sector counts each executed trade; overseas trades and registered-Singapore trades enter its numerator. The method requires correlation between trade count and RIT use. Values and unrealised gains are not substituted for counts without approval.
Inputs basis and example6 residual denominator
The normal numerator is directly taxable costs/input plus directly exempt costs/input for registered Singapore customers; denominator is directly taxable plus directly exempt costs/input. Residual costs normally stay out, unless including them gives a fairer result. Example6: S$10m total,1m qualifying direct,4m non-registered exempt direct and5m residual. A direct-only1/(1+4)=20% would overstate use; include residual to obtain1/(1+4+5)=10%. Do not present20% as the approved answer.
Staff basis and the50% business proxy
Use qualifying taxable/registered-exempt staff time or FTEs divided by total staff time/FTEs. Staff working on both types are excluded from numerator but included in denominator; if a significant mixed pool exists the method may be unsuitable. Separately, if the bank does not track customer registration, IRAS permits treating50% of exempt supplies to businesses as made to registered Singapore persons for RIT purposes. It does not deem50% of all consumer exempt supplies registered. Once a proxy is adopted use consistently; other proxies require approval.
Historical2025 implementation and2026-onward applications
For a2025 tax-year start the source required application by30 June2024. April/May/June2025 starts could receive case-by-case12-month implementation extension to the corresponding2026 date with a committed timeline. For tax years beginning2026 onward apply each calendar year between1 January and31 March. Start at the next tax-year opening after approval, or the second if not ready. The source’s17 May2025 example yields April/May2026 or2027 starts but June2025 or2026, because June’s next opening had not passed. Approval8 November2026 yields April/May/June2027 or2028. These are tax-year boundaries, not arbitrary12-month dates.
Submit via myTax Mail and report material changes
Use myTax Mail, enquiry GST Treatment, attaching letter and AnnexC supporting details. Approval lasts while fair and reasonable; material sale/transfer/acquisition, ending a sector’s main activity or changing GST-group membership must be reported in writing with information. IRAS may require a different method or stop the existing one from the actual business-change date. Permanent adoption does not excuse failure to revise a method that no longer reflects resource use.
AnnexA: classify all expenses
ABC Bank has corporate loans and own investments/treasury. Direct taxable E1/E4 S$8,100+45,000=53,100 claim in full; direct exempt E2/E5 S$900+9,000=9,900 not claimable. Corporate-sector residual E3 S$63,000 stays there. Shared rent E6 S$9,000 plus stationery E7 S$2,700=11,700 are allocated with200/300 staff,40%/60%:4,680 corporate and7,020 investment. This retains every expense in the example rather than applying one ratio indiscriminately.
AnnexA: recoverable amountS$107,145
Corporate outputs taxable24m+50% exempt36m over total60m give70%. Its RIT(63,000+4,680)×70%=47,376. Investment transaction counts450,000 taxable+50%50,000 exempt over500,000 give95%;7,020×95%=6,669. Total RIT54,045 plus direct53,100 =S$107,145 input for April–June2025, assuming all section19 conditions/evidence satisfied. The example’s50% proxy applies to its specified business-counterparty facts.
AnnexB: securities value proxies
Use cumulative net realised gains/losses each period at original cost, ignoring diminution; turn a cumulative net loss positive, e.g.10,000 gain less12,000 loss→2,000 supply proxy. Include arbitrage/suspense/stock/error accounts. SGX-ST supplies split50:50 registered/non-registered exempt; overseas-exchange amounts are100% taxable; direct trades use actual counterparty classification. If no exchange/direct tracking, split25% taxable,25% registered exempt,50% non-registered exempt. If exchanges are tracked but direct counterparties are not, do not use that25/25/50 globally: untracked direct trades are all non-registered exempt.
AnnexB: financial derivatives
Use cumulative realised and unrealised net gains/losses, treating net loss positive; include wrong client contracts booked to house/suspense. Local exchanges including CME trades transferred via Mutual Offset split50/50 registered/non-registered exempt; overseas exchanges100% taxable. Known OTC counterparties allocate by notional principal to the three classes. No tracking uses25/25/50; tracked exchanges but untracked direct trades require the conservative non-registered exempt classification rather than the global ratio. The source’s derivative note refers once to “securities”; read it in its derivative-table context.
AnnexB: interest and foreign exchange
Interest uses gross received income. Accrual is permitted if used in financial reporting, compliant with proper standards and consistently used in every GST return. Track counterparties to allocate taxable, registered exempt and non-registered exempt; without tracking all interest is local non-registered exempt. FX uses cumulative realised/unrealised net gains/losses, turning net loss positive, allocated by actual principal amounts for each customer class; without direct principal identification use25% taxable,25% registered exempt and50% non-registered exempt. These valuation proxies are not an automatic FITR.
AnnexC: applicant and business details
The application letter includes full applicant name, business address and GST number; a group lists each member’s name/UEN and separate remaining-section details. Describe activities/services/customer belonging and registration profile, whether input can be attributed and how automatic/manual tax coding works, customer-status tracking/onboarding/rechecks, evidence of genuine sector segmentation, and expected implementation time after approval. A single outputs-sector normally omits sections3/4; a proposed alternative still completes relevant section4.
AnnexC: methods, drivers and alternative proxies
For each cost driver describe associated RIT, basis, why suitable and evidence. For each sector provide name, taxable/exempt supplies, proposed recovery basis and why it best reflects actual use, actual registered-customer share versus proxy and supporting evidence. For a nonstandard supply-value proxy give affected supplies, description, why actual/AnnexB data are difficult and why representative; for a registered-exempt share other than50% give description and reasonableness. Complete section5 whenever these alternatives are requested.
The remaining FAQ safeguards
Intra-branch and intra-GST-group supplies are disregarded for the recovery fraction; overseas branch/group purchases may still attract RC, but their values stay out of the ratio. Received customer-accounted supplies also stay out. TP income must first be consideration for an actual service, then classified taxable/exempt and included under the approved basis. Direct exempt input is never rescued merely by a registered customer, while prior-year proxy calculations need current-year actual true-up. These five FAQ rules prevent conflating RC output with real bank sales.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗