FBR may reduce ST on steel products

The Federal Board of Revenue is likely to reduce sales tax on the steelmelters and steel re-rolling units being collected on the basis of per unit of electricity consumed by the steel manufactures. Sources told Business Recorder here on Tuesday that the tax authorities and the steel sector have convened meetings in which the industry has strongly suggested to further reduce the sales tax from existing Rs 7 per unit of electricity to a reduced rate.
In this connection, the FBR is reviewing the proposal of the steel sector to further reduce the sales tax on electricity consumed by steel-melters and steel re-rolling mills. The FBR had reduced sales tax from Rs 8 to Rs 7 per unit of electricity consumed by the steel-melters and steel re-rolling units and correspondently reduced the repayment-cum-drawback on the export of ingots/billets and mild steel re-rolled products through amendment in the Sales Tax Special Procedure Rules 2007.
In budget (2012-13), the FBR has increased the rate of sales tax from Rs 6 to Rs 8 per unit of electricity consumed by the steel-melters and steel re-rolling units. 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.
Under the 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 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 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.