Electricity consumption in steel: FBR may reduce sales tax to Rs 4-5 per unit

The Federal Board of Revenue is likely to reverse a 2012-13 budgetary measure by reducing sales tax from Rs 7 per unit of electricity to Rs 4-5 per unit for steel melters and steel re-rolling mills.
Sources told Business Recorder here on Tuesday that in budget (2012-13) sales tax rate on the basis of electricity consumption for production of steel billets, ingots and MS products increased to Rs 8 per unit from Rs 6 per unit of electricity consumed. Through another amendment in the Sales Tax Rules, the sales tax was reduced from Rs 8 to Rs 7 per unit of electricity consumed by the steel-melters and steel re-rollers.
This budgetary measure is likely to be withdrawn following approval of the Finance Ministry. The FBR had enhanced sales tax on the said sector in budget 2012-13 as a revenue generation measure. However, the measure is likely to be withdrawn.
Under the Sales Tax Rules, every steel-melter, steel re-roller and composite unit of steel melting and re-rolling (having a single electricity meter), would pay sales tax at the rate of Rs 7 per unit of electricity consumed for the production of steel billets, ingots and mild steel (MS) products which will be considered as their final discharge of sales tax liability.
According to the 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 Rs 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.