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Pak not to introduce Reformed General Sales Tax

May 18, 2011 - Islamabad

The International Monetary Fund (IMF) has agreed with Pakistan to give relaxation on the much-debated and much-controversial Reformed General Sales Tax (RGST), as Islamabad assured the international donor that it would bring Plan-B which would generate more revenue than the RGST in the coming budget 2011-12.

"Yes, the International Monetary Fund has agreed with Pakistan to not introduce the Reformed General Sales Tax, and now we will adopt Plan-B in which all tax exemptions will be eliminated in the annual budget 2011-2012, and this plan is more feasible than the RGST," The Nation quoted a Pakistan Finance Ministry official, as saying.

To a question, the official said that Pakistan did not demand the Letter of Comfort (LoC) from the IMF in its recent meeting, as "we only discussed budget-related issues".

The LoC would help Pakistan in getting budgetary support from the World Bank and the Asian Development Bank.

Under the Plan-B, the government expects Rs,1,968 trillion revenue in the coming financial year.

This includes Rs.90 billion on account of withdrawal of exemptions and zero-ratings given to textile, leather, sports, surgical sectors, which would be eliminated, additional Rs.254 billion through normal revenue growth and Rs.36 billion through administrative measures.

Under the Plan-B, the government would keep standard General Sales Tax (GST) rate at 17 per cent, while in the RGST the government had to decrease it to 15 per cent.


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