As introduced through the tabling of Funds 2024 final October, the federal government has elevated the speed of the service tax (SST) from 6% to eight%, efficient from right now, March 1, 2024. There are a number of classes which might be excluded from the brand new price, together with F&B, telecommunications, water and car parking, however generally, customers are set to pay extra on account of the hike.
Car upkeep – service and repairs to pay new 8% SST price
Within the automotive area, car servicing and repairs usually are not positioned in exempted classes beneath the revision, and so car upkeep is now set to price extra on account of the rise. Whereas the service tax on this case is utilized solely on labour expenses and never on elements and objects, motorists will nonetheless see a rise of their total car servicing prices from right now, marginal although it might be.
Motorcar insurance coverage – service tax elevated to eight%
One other unavoidable improve for motorists comes within the type of motor insurance coverage, as all business-to-consumer normal insurance coverage or takaful, excluding medical insurance coverage or medical takaful, is topic to the brand new 8% service tax price.
Earlier, it was intimated from insurance coverage suppliers that the tax would even be utilized partially on current insurance policies, the place for instance, a coverage with a protection interval from July 2023 to June 2024 would see the period of protection from March 1 to the top of the protection interval in June being topic to the service tax improve.
Based mostly on the newest data, this isn’t going to be the case, with motorcar insurance policies – that are paid in full – as much as February 29 paying the previous price of 6%, with no additional revision utilized on these. In fact, ranging from right now, all motorcar insurance coverage insurance policies will likely be topic to the brand new 8% price, charged on the precise premium paid, which suggests it’s calculated on the sum after NCD – if any – is utilized.
Automotive leases to pay new SST price – EV charging at house to price extra
Elsewhere, automotive rental and driver companies are additionally subjected to the rise to the 8% service tax price, whereas the brand new SST price can even have an effect on electrical energy payments for a phase of customers, being utilized on power utilization exceeding 600 kWh, that means that those that already pay greater than RM232 per thirty days can anticipate to pay extra for that utility invoice.
For electrical car homeowners, it will have a knock-on impact on the worth of charging their EV at house, on condition that doing so is more likely to improve the power consumption above the 600 kWh threshold. As it’s with car servicing and motor insurance coverage (the latter, typically), the rise is marginal, however it’s nonetheless a rise in expenditure, particularly when seen collectively.
The 8% SST, anticipated to generate RM3 billion in further income for the federal government, is alleged to be a part of tax reforms geared toward strengthening the nation’s fiscal basis.
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