Pakistan Steel Melters Association (PSMA), has proposed that in the coming budget, one percent withholding tax at the import stage should be made final discharge of tax liability to bring the steel melting sector at par with the ship breaking industry of the country.
Sources told Business Recorder here on Friday that the PSMA had submitted its budget proposals to the Engineering Development Board (EDB) for consideration and onward submission to the Federal Board of Revenue. The association has submitted a comparative data of the Steel Melters and Ship Breakers. In its budget proposals, PSMA argues that the steel melters pay one percent WHT at the import stage. But this is not their final liability. While the ship breakers also pay one percent WHT at the import stage as a final liability of the income tax.
The association points out that the steel melters have to pay 5 percent withholding tax on electricity consumption. This accumulates a huge amount since electricity is utilised as a raw material. On the other hand, ship breakers do not use electricity under this head. The burden has to be borne by the steel melters only.
It has been observed that since 1996 different modes have been adopted by FBR for collection of sales tax. Since PSMA parameters have already been defined, the best way to collect revenue in the coming budget could be gauging the production data. The proposals further suggest that HMS, which is the main source of scrap, should be considered as one entity. There are some kinds of broken auto parts, which are of no use for the steel melting industry. But 35 percent duty is levied on such auto parts. It is suggested that a committee on custom clearance be formulated taking the representatives of steel melting sector on board to sort out the issue.