BR reported that the Federal Board of Revenue is planning to impose sales tax on the import of iron and steel scrap.
Sources said that that the FBR has proposed imposition of 5% sales tax on the value of imported iron and steel scrap or PKR 1,600 sales tax per tonne which ever is higher.
The sales tax would be chargeable on the basis of value of the imported iron and steel scrap. In case the government notifies the decision it would be a new levy as there was no sales tax on the import of iron and steel scrap. The sales tax would be adjustable against power bills being paid by steel melting and steel re rolling units. The FBR has also decided to reduce sales tax on the steel melting and steel re rolling units being collected on the basis of per unit of electricity consumed by the steel manufactures. The sales tax is expected to be brought down from PKR 7 to PKR 4 per unit of electricity.
The FBR had reduced sales tax from PKR 8 to PKR 7 per unit of electricity consumed by the steel melting and steel re rolling units and correspondently reduced the repayment cum drawback on the export of ingots per billets and mild steel re rolled products through amendment in the Sales Tax Special Procedure Rules 2007. In budget (2012 to 2013), the FBR has increased the rate of sales tax from PKR 6 to PKR 8 per unit of electricity consumed by the steel melting and steel re rolling units. Through another amendment in the Sales Tax Rules, the sales tax was reduced from PKR 8 to PKR 7 per unit of electricity consumed by the steel melting and steel re rollers.
Under the Rules, every steel melter, steel re roller and composite unit of steel melting and re rolling would pay sales tax at the rate of PKR 7 per unit of electricity consumed for the production of steel billets, ingots and mild steel products which will be considered as their final discharge of sales tax liability.
According to the amended rules, the payment of tax by steel melters, re rollers and composite units of melting and re rolling shall be made through electricity bills along with electricity charges. Provided that in case the due amount of sales tax is not mentioned in the electricity bill issued to any steel melter or re roller or composite unit of melting and re rolling, the said melter or re roller or composite unit shall deposit the due amount of tax for the relevant tax period at the rate of PKR 7 per unit of electricity consumed excluding the amount of sales tax already paid on the electricity bill related to the said tax period through his monthly sales tax return.
