FBR Promises Steel Sector Refunds And Easier Tax Compliance

The Federal Board of Revenue (FBR) has assured Pakistan's documented steel industry that pending tax refunds will be released and procedural hurdles eliminated for digitally compliant steel manufacturers, Business Recorder reported.

The commitment came during consultations between FBR officials and representatives of the Pakistan Association of Large Steel Producers (PALSP), aimed at finalising the sales tax rate to be collected through power units and addressing related implementation issues.

Industry representatives told the FBR that the steel sector is facing severe financial pressure, with delays in income tax refunds restricting working capital, disrupting cash flows, and increasing financial stress on manufacturers. They urged the tax authority to resolve the issue, noting that the current FBR leadership has shown a stronger commitment to reforms.

The meeting was attended by PALSP Chairman Javaid Iqbal Malik, CEO/Secretary General Syed Wajid I. Bukhari, senior FBR officials, and other representatives from the steel industry.

During the discussions, the industry proposed a sales tax of Rs35 per kWh for non-compliant units, adjustable under Section 8B of the Sales Tax Act, while recommending a reduced rate of Rs5 per kWh for compliant units under the same provision.

The association also suggested defining compliant units as those using at least 70% imported scrap and maintaining 100% digital compliance. It proposed that the FBR prepare a list of eligible units based on import data from the previous 12 months and update the list every month.

A senior FBR official observed that certain steel manufacturers had been claiming input adjustments for goods unrelated to steel production and said the authority has begun blocking such ineligible input claims.

Officials further informed participants that meter readings have started at seven captive power units, while the FBR will install meters wherever they are not already available. Hamid Ateeq instructed the FBR's Chief of Operations to ensure the necessary steps are completed.

The meeting concluded with a decision for the FBR to assess the impact of the sales tax collection mechanism through power units over the next six months, after which the rates may be revised if required. The overall policy will undergo a comprehensive review after one year to determine whether it should remain in place.