We will set the GST at 4%, as proposed by government
| Goods Supplied | GST Cash Flow | GST Collected by Government |
| Pak Abu, a timber logger sells timber to Muthusamy, a furniture manufacturer, for RM220 ( including RM9 GST). | Muthusamy pays the RM9 GST to the Internal Revenue Board | RM9 |
| Muthusamy uses the timber to make a table and sells it to Wai Kong, a furniture retailer, for RM440 (including RM 18 GST ) | Muthusamy is entitled to an input tax credit for the RM9 GST included in the price paid to Pak Abu. He offsets this RM9 against the RM18 payable on the supply of the table to Wai Kong and pays RM9 to the Internal Revenue Board | RM9 |
| Wai Kong sells the table to Isabella, a consumer, for RM550 (including RM22 GST) | Wai Kong is entitled to an input tax credit for the RM18 GST included in the price paid to Muthusamy. He offsets this RM18 against the RM22 GST payable on the supply of the table to Isabella and pays RM4 to the Internal Revenue Board. | RM4 |
| Isabella purchased the table for RM550 | Isabella bears the full costs of the RM22 GST as consumers cannot claim input tax credits. | Total: RM22 |
