What is rgst? RGST Stands FOR

Reformed General Sales tax (RGST)

RGST stands for 'Reformed Goods & Services Tax'. 

It is an improved version of GST which stood for 'General Sales Tax'.
The primary difference is that whereas GST was applied only to the goods at the final point of sale, RGST would also be applicable on services. This means if we go to see a doctor, he would also apply 15% tax at the end when billiing for his fee. Similarly lawyers, engineers and other professionals would also apply a 15% tax on their services/consultation.
The second difference is that RGST waives off exemptions from certain goods which had hitherto been given in the GST regime. For instance computer hardware industry uptil 2 years before had been exempt from GST but was included in GST in 2008. Similarly sports goods, textiles and leather goods etc which were hitherto exempted from GST would now be subjected to 15% taxation.However, exemptions earlier available for philanthropic, charitable, educational, health or scientific research purposes or under international commitments /agreements including grants-in-aid will also continue.
Thirdly there has been a rationalization of tax rates. Some products were being charged higher rates (e.g. 19.5% on telecom calls), and some lower than usual (e.g. 8% on sugar). Now all would be brought to 15% standard rate. This means while telecom services would get cheaper, but sugar would be dearer.

IMPLEMENTATION OF REFORMED GST (RGST) IN PAKISTAN AND ITS FEATURES

 

Pakistan is in dire need of increasing its tax revenues by implementing a broad-based modern form of sales tax on goods and services. The Sales Tax Act, 1990, was originally designed on the basis of accepted value added taxation doctrines but due to political compromises and revenue exigencies, it increasingly became distorted and narrow-based because of ever-expanding exemptions, special regimes, multiplicity of rates and several other deviations from international best concepts and practices. Resultantly, not only the tax base of sales tax and income tax has been eroded but also lack of documentation of the national economy has proved a big hindrance in the development of effective tax policy options.

2. Under the existing constitutional framework, the Federal government can impose taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed. The Federal government has been levying excise duty on services. After passage of the 18th Constitutional Amendment, taxation of services now wholly falls within the domain of Provincial governments.