close
Tuesday March 19, 2024

FBR mulls sales tax hike for steel industry

By Our Correspondent
April 24, 2018

KARACHI: Federal Board of Revenue (FBR) is considering an increase in sales tax on steel industry to Rs15/electricity unit from an existing Rs10.5 to bring it at par with other sectors, officials said on Monday.

The current sales tax for steel melters is much lower than the standard rate. In fact, the sales tax on melters, re-rollers and ship breakers are low as compared to standard sales tax rate of 17 percent.

Currently, present value of steel is Rs72,000/metric ton on which sales tax is calculated at Rs10.50. The revised sales tax rate of Rs15.30 /unit will bring it at 17 percent. The FBR calculates sales tax on a unit of electricity consumed, considering that 800 units of electricity are required for one metric ton of steel.

Officials at Large Taxpayers Unit Karachi said the tax managers proposed an increase in sales tax for steel melters, re-rollers and ship breakers. Sales tax on steel industry is governed under Sales Tax Special Procedure Rules, 2002 and under which every steel-melter, steel re-roller, composite units of melting, re-rolling and composite unit of steel melting and re-rolling (having a single electricity meter) are required to pay sales tax of Rs10.5/unit of electricity consumed for the production of steel billets, ingots and mild steel products, excluding stainless steel.

Tax collected under the law is final discharge of sales tax liability by the steel industry. The FBR said the rates of sales tax on the basis of electricity consumption would only be applicable to units consuming electric power supplied by public sector electricity distribution companies and K-Electric Limited.