RGST

By
Mavia Umer
BSS-4
REFORMED GENERAL SALES
TAX
Difference between GST and RGST
• The primary difference is that GST was applied only to the
goods at the final point of sale, whereas RGST would also
be applicable on services

• The second difference is that RGST waives off exemptions

from certain goods which had hitherto been given in the
GST regime

• Thirdly there has been a rationalization of tax rates.

 Criticisms
• It disproportionately affects those in lower
income brackets than those who earn more
• If the economy has to be documented, in
terms of widening the tax net, then surely that
can be done without having to raise the
existing rate of GST
• RGST is inflationary and that is something that
the economy can ill-afford at this point in
time.
 Favours
• RGST will help government formalize a vast
segment of undocumented economy
• By bringing the undocumented sector in to
formal tax net government hopes to increase
the direct taxes.
• It will help government to increase the total
tax collection in the country which stands at
dismal 9% of the GDP
 Opposition
Three important government allies —
Muttahida Qaumi Movement (MQM), Jamiat
Ulema-i-Islam (JUI-F) and Awami National
Party (ANP) — opposed the motions seeking
recommendations on the General Sales Tax
Bill 2010 and Finance (Amendment) Bill 2010
“We will not support RGST even if
we are killed”
 Application of RGST
It will be a tedious task for the PPP to first
secure approval for the legislation from the
standing committee and then from the
National Assembly as the bill’s fiercest
opponents are drawn from opposition
groups as well as allies in the ruling coalition.