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New 8% service tax from March 1 – automotive upkeep, motor insurance coverage and residential EV charging prices go up

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New 8% service tax from March 1 – car maintenance, motor insurance and home EV charging costs go up

As introduced through the tabling of Finances 2024 final October, the federal government has elevated the speed of the service tax (SST) from 6% to eight%, efficient from as we speak, 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 automobile parking, however basically, shoppers are set to pay extra on account of the hike.

Automobile upkeep – service and repairs to pay new 8% SST price

Within the automotive area, automobile servicing and repairs will not be positioned in exempted classes beneath the revision, and so automobile upkeep is now set to value extra on account of the rise. Whereas the service tax on this case is utilized solely on labour prices and never on components and objects, motorists will nonetheless see a rise of their general automobile servicing prices from as we speak, marginal although it could be.

New 8% service tax from March 1 – car maintenance, motor insurance and home EV charging costs go up

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 basic 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 length of protection from March 1 to the tip 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 as we speak, all motorcar insurance coverage insurance policies will likely be topic to the brand new 8% price, charged on the precise premium paid, which implies it’s calculated on the sum after NCD – if any – is utilized.

New 8% service tax from March 1 – car maintenance, motor insurance and home EV charging costs go up

Automotive leases to pay new SST price – EV charging at house to value extra

Elsewhere, automotive rental and driver providers 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 section of shoppers, being utilized on vitality utilization exceeding 600 kWh, which means that those that already pay greater than RM232 per thirty days can anticipate to pay extra for that utility invoice.

For electrical automobile house owners, this may have a knock-on impact on the value of charging their EV at house, on condition that doing so is prone to improve the vitality consumption above the 600 kWh threshold. As it’s with automobile servicing and motor insurance coverage (the latter, usually), 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 claimed to be a part of tax reforms geared toward strengthening the nation’s fiscal basis.

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