Electricity consumed by melting industry: PSMA urges FBR not to enhance sales tax

The Federal Board of Revenue (FBR) has been requested not to enhance sale tax on electricity consumed by melting industry and retain the existing sales tax special procedure under SRO.678. Sources said that Pakistan Steel Melters Association (PSMA) has requested the Chairman FBR in writing that if the sale tax was reverted back to Rs 7 per electricity unit consumed by the furnace industry, it would badly affect the industry.
The PSMA contended the above stated SRO was issued after great deliberations following the failure of normal regime because level playing field was not available for the genuine taxpayers. With the implementation of Special Procedure, the tax net was broadened and resulted in improvement of revenue. However, in view of manifold increase in electricity tariff and losses to the furnaces, the special procedure was revisited and sales tax on per unit electricity was reduced to Rs 4 per electricity unit. The industry was of the view that reversion to old regime would be unaffordable and may result in loss in terms of revenue.
The PSMA further stated that decision to reduce the sale tax to Rs 4 per unit sale tax on electricity consumed by the furnace was taken after deliberation so that the considerable revenue generating industry could sustain. If the sales tax is reverted back to Rs 7 per electricity unit consumed it will be a major blow to this already dwindling industry. Majority of furnaces would revert back to old regime and exchequer will undergo heavy losses, the industry added.
According to industry, the frequent and forced load shedding result in spoiling of prepared melted heats and the whole procedure of melting has to restart. As a result it causes heavy burden on the industry because disruption of electricity doubles the cost of ingots/billets. The fuel adjustment charges are another burden as the industry can not pass on the burden because the goods are already sold. The industry urged the authorities that the sectors, which are not paying taxes like the scrap dealers, should be brought into the tax net.