Number of products: Documented steel sector will claim input tax adjustment

ISLAMABAD: The Federal Board of Revenue (FBR) will allow the documented steel sector to claim input tax adjustment on a number of products that were earlier made inadmissible under the Sales Tax General Order (STGO) 12 of 2022.

During an interaction with the tax authorities, the steel sector categorically said that the industry is facing serious issues due to the denial of input tax adjustment on essential products.

The FBR issued STGO 12 of 2022 dated April 7, 2022, on the subject, “Input Tax Adjustment to Manufacturers of Oil and Ghee and Steel Melters and Re-Rollers”.

Under the said order the FBR had issued a list of 778 goods on which manufacturers of oil and ghee and steel melters/rerolling mills cannot claim input tax adjustment in their monthly sales tax return. From April 1, 2022, the manufacturers of oil and ghee would not be entitled to claim input tax adjustment on 348 items. However, the steel melters and re-rollers would not be able to claim input tax adjustment on 430 items.

Sector experts told Business Recorder that the denial of input tax adjustment on 778 items would have serious consequences for the steel sector. This restriction of disallowing input tax adjustment would increase the cost of these sectors.

The steel sector had submitted a list of PCT Codes for exclusion from the list of products notified in STGO # 12 of 2022, on which input tax credit was made inadmissible. Earlier this month, the industry was informed that the input of some of the PCTs have been allowed and PRAL has been instructed to allow inputs against the PCTs mentioned in Annex A of the notification.

The items on which tax adjustment needs to be allowed to the steel sector included mineral substances; slag, dross (other than granulated slag), scalings and other waste; slag and ash, including seaweed ash (kelp); prepared binders for foundry moulds or cores; ceramic goods (e.g. retorts, crucibles, muffles, nozzles, plugs, supports); hydrometers and similar floating instruments thermometers, pyrometers; instruments and apparatus for physical or

chemical analysis and measuring or checking instruments, appliances and machines.

Despite this, still PRAL has not allowed inputs against some of these PCT codes (namely HS Code 2710). As a result, the documented steel units are facing problems.

The industry has submitted a list of the remaining PCT Codes for exclusion from STGO # 12 of 2022. It is requested that both the above-cited issues may kindly be resolved at the earliest.

The FBR has assured the steel sector that the STGO 12 of 2022 would be amended to allow the documented steel sector to claim input tax adjustment on the remaining products.

Copyright Business Recorder, 2022