Sales Tax on Electricity Further Tightened for Steel Industry in Pakistan; Re-Rollers Mandated to Pay Rs30 Per Unit
ISLAMABAD: The Federal Board of Revenue (FBR) has now further tightened the rates of sales tax on usage of electricity in the country’s steel industry, imposing stringent conditions for the steel units operating under different regions.
The tax authority’s official notification has said that certain exemptions and reduced rates for steel melters, composite units and re-rollers in the former FATA and PATA parts of the country will now be strictly observed based on conditionality.
The Revised Tax Structure contains important information that needs to be reviewed.
New Rules: According to the new rules, steel re-rollers will be liable to the sales tax on electricity consumption during their manufacturing process at Rs30 per unit.The provisions for the FATA and PATA Units are:
The regulations have been tightened for steel melters and composite units in the previously FATA and PATA regions. These units will be subject to the general sales tax (GST) at Rs20 per unit if they use local scrap materials.
Concessionary Rates on Imported Raw Materials:
The concession rate of Rs5/unit will be given only if 70% or more raw materials are imported or scrap is used. Moreover, this concessionary slab will be given on a quarterly purchase/import basis.
The notification states that the electricity bills for the sale of electricity will be deemed as an advance payment and will be adjusted in the output tax liability. Further, there will be no transfer of the registered electricity connection, or any change in registered status, without the registered electricity connection being terminated.