The government is likely to announce on Saturday fixed sales tax for different steel sub-sectors, as the Federal Board of Revenue has signed the SRO, sources in the industry told Business Recorder on Friday.
Giving details, they said that most probably the sales tax would be Rs 4100 per ton for melters, Rs 3600 for shipbreakers, Rs 617 for re-rollers and Rs 4,845 for Steel Mills. The tax would now be charged Rs 4.75 per unit rather than Rs 5.20 and is to be collected through electricity bill, they said.
The melters and re-rollers have assured the government that they would contribute about Rs 15 billion (Rs 12.5 billion by melters and 2.5 billion by the re-roller) in the current fiscal year.
Sources in the Ministry of Industries confirmed that all stakeholders had agreed that sale tax, Rs 5.20 on each unit, would be collected through electricity bills. But now it is learnt that it has been reduced from Rs 5.20 per unit to Rs 4.75 in the SRO likely to be issued on Saturday.
The set benchmark for steel industry is 800 units per ton production. The CBR, to ensure the target given by the melters and re-rollers, will establish a separate collectrate in Lahore where monthly revenue collection would be analysed.
Sources said that the industry was of the view that elimination of import duty on scrap would discourage smuggling and close the doors for the undocumented sector. About 1.5 to 2 million tons scrap of low quality is being smuggled into Pakistan.
To ensure equitable distribution of billets of Pakistan Steel Mill (PSM), the Engineering Development Board (EDB) suggested doing away with the role of middlemen and that the distribution should be made on capacity basis after a survey to by conducted by the PSM.
All stakeholders hoped that withdrawal of sales tax and zero rate import duty would reduce steel products prices substantially. These meetings were held at the EDB and FBR and, as a result, the government has issued SRO to abolish duty on scrap and withdrew duty on import.
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