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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.
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∙ 13y ago
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What is the difference between GST and RGST?
The transition from General Sales Tax (GST) to Reformed General Sales Tax (RGST) has become an intricate and controversial topic for no particular reason. Let me start the discussion by acknowledging that RGST is not a new tax as generally perceived, rather it is the old GST which when fully implemented would be a sufficiently broadened and extended version of the existing GST.
What are the advantages and disadvantages of RGST?
Advantages of RGST§ The imposition of RGST was not the demand of International Monetary Fund (IMF), but it was the need of the country, and added that subsidy on electricity, wheat flour and other items had been withdrawn.§ Expansion in tax net was indispensable to bolster the economy and run other financial affairs of the country.§ A sum of Rs160 billion was required to rehabilitate the flood victims and if RGST was not imposed then how could this amount be raised?Disadvantages of RGST§ Reforms General Sales Tax (RGST) is aimed at economic self-reliance to a journey towards welfare society. GST is already imposed on around 5,000 items ranging between 17-25 percent and in reformed shape this rate would be universalized at 15 percent.§ RGST would boost inflation to the disadvantage of common man. The prices of only around 400 out of around 5,000 items might see upward trends while in the case of rest they would come down.§ No tax was being imposed on essential daily use food items which nullify the claim that common man would be burdened in the changed scenario.§ Documentation of economy was a key to progress and prosperity of country and RGST was a step forward in this direction.
