When Singapore's Goods and Services Tax (GST) rose from 8% to 9% on 1 January 2024, the reaction was mixed. Some dismissed it as "just one percentage point." Others worried it would push up the cost of everything from hawker food to groceries. Now, more than two years into the new rate, the dust has settled — and the reality is somewhere in between.
In this guide, we look at how the 9% GST actually affects different types of Singapore households, what is exempt, what government support is available, and how you can manage the impact on your family budget.
Understanding What GST Applies To
Before we dive into the numbers, it is worth understanding what GST covers — and what it does not. GST is charged on most goods and services supplied in Singapore, as well as on imports. When you buy a laptop from Challenger, eat at a restaurant, or pay your mobile phone bill, you are paying 9% GST on top of the base price.
However, certain essential items are exempt or zero-rated. The most significant exemptions include the sale and rental of residential property, financial services (like bank account fees and insurance premiums), and the supply of digital payment tokens. Exports of goods are zero-rated, meaning GST is charged at 0%.
Importantly, most fresh food sold at wet markets is not subject to GST because the stallholders typically fall below the $1 million turnover threshold for GST registration. The same applies to many small hawker stalls. So if you buy your vegetables from the wet market and eat at your neighbourhood hawker centre, a good portion of your food spending may not attract GST at all.
The Real Dollar Impact on Households
Let us put some numbers to it. According to the Department of Statistics, the average Singaporean household spends around $5,200 per month on goods and services. Not all of this spending is subject to GST — housing (for HDB owners), education at government schools, and certain financial services are excluded.
If we estimate that roughly 60% of household spending is GST-taxable (a reasonable assumption for most families), that is about $3,120 per month subject to GST. The increase from 8% to 9% — one percentage point — adds about $31 per month or $372 per year to that household's costs.
For a lower-income household spending $3,000 per month, with perhaps 50% subject to GST, the additional cost is closer to $15 per month or $180 per year. For a higher-income household spending $8,000 per month with 70% GST-taxable, the extra cost could be around $56 per month or $672 per year.
These numbers may seem modest in isolation, but they come on top of years of rising costs in areas like food, transport, and utilities. For families already stretched thin, every additional dollar counts.
Who Feels It Most?
GST is a regressive tax by nature — it takes a larger share of income from lower earners than from higher earners, because everyone pays the same rate regardless of how much they earn. A family earning $3,000 a month spends a higher percentage of their income on GST-taxable goods than a family earning $15,000 a month.
The government is well aware of this, which is why it introduced the Assurance Package — a multi-billion dollar support scheme to help lower- and middle-income Singaporeans absorb the GST increase over several years.
For an average lower-income household, the Assurance Package benefits — including GST Voucher cash, U-Save rebates, and MediSave top-ups — are designed to more than offset the additional GST paid for at least five years after the increase. In effect, the lowest-income households should come out ahead in dollar terms during this transition period.
But what happens when the Assurance Package runs out? That is the longer-term concern. Once the transitional support tapers off, the full 9% GST will be borne without offset, and households will need to have adjusted their budgets accordingly.
GST on Everyday Expenses: A Closer Look
Let us break down where GST hits hardest in daily life.
Dining out and takeaway: Restaurants, cafes, and food delivery services charge 9% GST. A $10 meal becomes $10.90. It sounds small, but if your family eats out frequently — as many Singaporean families do — it adds up. A family spending $800 a month on dining could be paying an extra $8 compared to the old 8% rate.
Groceries from supermarkets: Supermarkets like FairPrice, Cold Storage, and Sheng Siong are GST-registered, so most items carry the 9% tax. Fresh produce, packaged food, household items, and toiletries all attract GST. A $500 monthly grocery bill now includes about $41 in GST, compared to $37 at the old rate — a difference of $4.
Utilities: Your SP Group electricity and gas bills include GST. Water charges, however, include a separate water conservation tax. For a household spending $200 on utilities, the GST component is about $16.50 at 9%, compared to $14.80 at 8% — roughly $1.70 more per month.
Transport: Public transport fares (MRT and bus) do not directly include GST in the same way — they are regulated fares. But taxi and private hire car rides (Grab, Gojek) are subject to GST. If you spend $200 a month on ride-hailing, you are paying about $16.50 in GST.
Telecommunications and streaming: Your mobile plan, broadband, Netflix, and Spotify subscriptions all carry 9% GST. Imported digital services have been subject to GST since 2020, so there is no escaping it even for overseas subscriptions.
Government Support: The Assurance Package
The Assurance Package is the government's main tool for cushioning the GST impact. It was originally budgeted at $9.6 billion and has since been topped up in subsequent budgets.
For 2026, eligible Singaporeans receive:
GST Voucher — Cash: Up to $700 for those with assessable income of $34,000 or less and living in properties with an annual value of $21,000 or below.
GST Voucher — MediSave: Up to $250 for citizens aged 65 and above with assessable income of $34,000 or less.
U-Save rebates: $100 to $160 per quarter for HDB households, depending on flat type. One- and two-room flats receive the highest rebates.
CDC Vouchers: $500 per household, which can be spent at participating hawker stalls, heartland shops, and supermarkets.
For a family living in a three-room HDB flat with a household income of $5,000 per month, the combined support easily exceeds the estimated $370 annual increase in GST costs. The maths works in their favour — for now.
GST for Businesses: Registration and Compliance
If you run a business in Singapore, GST registration is compulsory once your taxable turnover exceeds $1 million in a 12-month period. Voluntarily registered businesses with lower turnover must stay registered for at least two years.
As a GST-registered business, you charge 9% GST on your goods and services, collect it from your customers, and remit it to IRAS quarterly. You can also claim back GST paid on your business purchases (input tax), which offsets the amount you owe.
For many small businesses, the key question is whether to register voluntarily. If most of your customers are other GST-registered businesses, voluntary registration makes sense because your customers can claim back the GST anyway, and you benefit from input tax credits. But if you mainly serve individual consumers, adding 9% to your prices could make you less competitive compared to non-registered competitors.
Our GST calculator helps you work out GST-inclusive and GST-exclusive prices, which is useful for invoicing and pricing decisions.
Practical Tips for Managing the GST Impact
While you cannot avoid GST entirely, there are sensible ways to manage its impact on your household budget:
Buy from wet markets and small hawker stalls that are not GST-registered. Your dollars go further when the vendor is not adding 9% on top.
Use CDC Vouchers and other government credits actively. Many families let these expire unused. Check your eligibility and spend them before they lapse.
Cook at home more often. Beyond the obvious health benefits, home cooking avoids the GST and service charge that restaurants add. A family that switches two restaurant meals per week to home cooking could save over $200 a month.
Review subscriptions and recurring costs. Every subscription carries GST. Cancelling unused streaming services, gym memberships, or magazine subscriptions saves both the base cost and the 9% tax on top.
Maximise CPF and SRS contributions for tax savings. While this does not directly reduce GST, lowering your income tax through tax reliefs frees up cash that can help absorb higher GST costs.
The Bigger Picture
The move to 9% GST was not taken lightly. The government delayed the increase several times — first because of COVID-19, then because of global inflation. The revenue raised funds critical services including healthcare, infrastructure, and social support for an ageing population.
For most working Singaporeans, the 9% GST is a manageable cost, especially with the Assurance Package in place. But it is still worth understanding exactly how much you are paying and where your money goes. Use our salary calculator to see your full take-home pay picture, and factor in your estimated GST costs when planning your monthly budget.
Knowledge is the best tool against financial uncertainty. The more clearly you see your numbers, the better decisions you can make.