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July 14, 2018

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Steel melters allowed sales tax adjustment at import stage

KARACHI: The Federal Board of Revenue (FBR) on Friday allowed sales tax adjustment paid at customs clearance stage by steel melters on import of raw materials including various categories of remeltable iron and steel scrap.

The FBR notified the revision of procedure through Sales Tax General Order (STGO).

The taxation on steel melters is governed by Sales Tax Special Procedures Rules and most of the producers have opted to pay sales tax through electricity bills.

The FBR, in the notification issued, said the adjustment of would only be applicable on those steel melting units, which were paying sales tax through electricity bills.

“However, steel mills operated by sugar mills or other persons, using self-generated electricity and steel melting and re-rolling units, which opted to pay sales tax on ad valorem basis are not entitled to the adjustment,” the revenue body added.

The board explained that the sales tax adjustment would only be allowed to the extent of amount paid at import stage on the various categories of scrap.

Pakistan Steel Melters Association (PSMA) has been directed to provide a list of bona fide producers, who have single electricity meters and are paying sales tax through power bills.

The association has also been advised that the list should contain details of producers including NTN/STRN, electricity consumer number, name of electricity distributing company.

The FBR said the list provided by the association would be sent to concerned tax department for post verification.

The FBR said, according the procedure, the adjustment would be allowed against the amount of sales tax noted on electricity bill and the record will be maintained by power distribution companies (DISCOs).

“The DISCOs shall maintain account of adjustment allowed against a particular adjustment note and the balance shall be carried forward to the subsequent month for adjustment in similar manner,” the FBR said.

The revenue body also directed all the tax departments to obtain records of adjustment for the monitoring purpose. The adjustment has been allowed on consignments cleared from July 01, 2018 onwards.

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