Still no consensus on RGST

Committee on Reformed General Sales Tax (RGST) on services fails to convince provinces on transfer of taxation.

ISLAMABAD: The technical standing committee on Reformed General Sales Tax (RGST) on services has failed to convince the provinces on the transfer of taxation on 10 major services involving input adjustment to the federal government.

The National Finance Commission’s technical standing committee on RGST on services started its final round of deliberations on Thursday for identifying which services will be taxed by the federal government and which will be taxed by the provinces. The meeting had earlier identified six services as stand-alone where no input tax adjustment is involved. Taxation on these services was transferred to provinces.

However, due to strong opposition from the province of Sindh, the meeting failed to decide who will be allowed to collect RGST on the 10 services where substantial input tax adjustment is involved.

Sources said that the meeting tried to convince Sindh to agree on allowing the Federal Board of Revenue (FBR) the responsibility for the collection of RGST on these 10 major services.

A senior official at the FBR said that on the second day on Friday, which is the last day for the finalisation of recommendations by the committee, Sindh might agree to the proposal so that a framework on imposing RGST on services may be finalised before the due date of October 15.

Sources informed that at present, around 100 services are under consideration before the authorities and all these services which are not handed over to Islamabad, will be handed over to the provinces for the imposition and collection of RGST from the date of its enforcement.

The draft of RGST legislation will be finalised after receipt of the committee’s report by October 15, and presented in the National Assembly and the four provincial assemblies for approval.

Published in The Express Tribune, October 15^th, 2010.