FBR Assures Steel Sector of Policy Support, Consultation

The Federal Board of Revenue (FBR) has assured the documented steel sector that outstanding refund payments will be cleared and procedural bottlenecks removed for digitally compliant steel units across the country.

 

The assurance came during a consultative meeting with the Pakistan Association of Large Steel Producers (PALSP) to finalise the sales tax rate to be charged through power units and clarify related implementation issues.

 

Industry representatives informed the FBR that the steel sector is facing significant financial challenges, with delays in income tax refunds putting pressure on working capital and cash flows. They urged the tax authority to expedite refunds, particularly as the current FBR leadership pursues reforms to improve the business environment.

 

The industry proposed a sales tax rate of Rs35 per kWh for non-compliant units and Rs5 per kWh for compliant units, both adjustable under Section 8B of the Sales Tax Act. It also recommended defining compliant units as those using at least 70% imported scrap while maintaining 100% digital compliance, with the FBR updating the list of compliant units on a monthly basis.

 

A senior FBR official acknowledged concerns over incorrect input claims by some manufacturers and said the tax authority has started blocking input claims for items unrelated to steel production to improve compliance.