From 1 April 2026, the Beverage Container Return Scheme (BCRS) is operational in Singapore.
Under this regulatory framework, sellers of regulated beverages are required to collect a refundable deposit of $0.10 per regulated beverage container, in addition to the selling price of the beverage.
IRAS Clarification on GST Treatment
The Inland Revenue Authority of Singapore (IRAS) has issued a technical clarification that GST must not be charged on the BCRS deposit. Specifically:
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The $0.10 deposit is excluded from the GST value of the supply of the regulated beverage.
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GST is to be calculated solely on the consideration for the beverage itself (i.e., the net selling price before deposit).
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When the deposit is refunded to the consumer upon return of the container, no GST adjustment or input tax claim arises on that refund amount.
Accounting Impacts for Tax Accountants
| Aspect | Implication |
|---|---|
| Output tax computation | Deposit amount must be excluded from taxable supply value. Systems must be configured to split beverage price and deposit at point-of-sale. |
| Invoice presentation | Invoices should separately state the deposit as non-GST amount to avoid over-declaration of output tax. |
| Accounting for deposit collections | Deposit collected is a liability (not revenue). Should be recorded in a separate liability account (e.g., “BCRS Deposit Payable”). |
| Unredeemed deposits | If deposits are not refunded (e.g., containers not returned), the liability may be derecognised. IRAS has not yet clarified GST treatment of forfeited deposits – this remains a practical issue. Accountants should monitor for future guidance on whether forfeited deposits become taxable supplies or regulatory income. |
| Input tax on handling fees | Fees paid to scheme operators for deposit administration (if any) may be subject to GST. Ensure valid tax invoices are obtained for input tax claims. |
Practical Issues for Implementation
- System changes – POS and ERP systems must be updated to segregate deposit from beverage price for GST reporting. Failure to do so could result in over-remittance of output tax.
- Reconciliation risk – Total deposits collected must reconcile with liability account balances and eventual refunds. Unreconciled differences may trigger tax audit queries.
- Cross-border or wholesale transactions – Clarify whether BCRS deposit applies at first sale to retailer or at retail point. This affects GST reporting along the supply chain.
- Forfeited deposits – Until IRAS issues further guidance, accountants should adopt a conservative position: treat forfeited deposits as non-taxable regulatory income, but prepare for potential retrospective GST liability if IRAS later deems them as consideration for a supply.
Actions to Consider
All entities selling regulated beverages in Singapore should immediately:
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Update tax filing workflows to exclude BCRS deposits from output tax.
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Review accounting policies for deposit liability recognition and derecognition.
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Monitor IRAS e-Tax guides for supplementary guidance on unredeemed deposits.
Source: IRAS, 1 April 2026