Pakistan’s Pakistan Association of Large Steel Producers (PALSP) has urged the Federal Board of Revenue (FBR) to introduce a lower sales tax rate for digitally compliant steel mills while clearing outstanding tax refunds to ease pressure on the industry’s working capital, according to the local media reports.
During consultations with the FBR on a proposed sales tax collection mechanism through electricity consumption, PALSP said the steel sector continues to face challenging market conditions and called for measures to support compliant producers.
The association proposed a sales tax rate of PKR 5/kWh for compliant mills and PKR 35/kWh for non-compliant units, with both rates remaining adjustable under Section 8B of the Sales Tax Act.
PALSP also proposed defining compliant producers as mills with at least 70pct imported scrap and full digital compliance, with the FBR publishing and updating the list of compliant units on a monthly basis.
The FBR said it has begun monitoring electricity consumption at captive power units and blocking tax claims on inputs unrelated to steel production. The tax authority also indicated that the proposed sales tax mechanism will be reviewed after six months, while outstanding tax refunds for compliant steel producers will be processed.