Power consumption: FBR considering increasing GST on steel sector

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue is planning to increase the sales tax on steel melters, steel re-rollers and composite units of steel melting and re-rolling from Rs 6 per unit of electricity to Rs 7-8 per unit of electricity consumed in budget (2012-13).

Sources told Business Recorder here on Friday that the Ministry of Finance and FBR are reviewing the budgetary proposal of increasing the incidence of sales tax on steel sector which is operating under special sales tax procedure. The increase in the prices of the steel products including steel billets, ingots and mild steel (MS) products has forced the budget makers to consider slight increase in the percentage of sales tax being charged by the steel sector. At present, the sales tax has been charged on the steel sector on the basis of electricity consumed by them. Every steel-melter, steel re-roller and composite unit of steel melting and re-rolling (having a single electricity meter), is paying sales tax at the rate of Rs 6 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.

In this regard, the FBR has proposed amendment in the "Special Procedure for payment of sales tax by steel melters and re-rollers". Under the proposed amendment, the rate of sales tax has been proposed to be increased from Rs 6 per unit of electricity consumed to Rs 7-8 per unit of electricity. However, it is merely a proposal which is under consideration of the budget makers and nothing is final in this regard.

Under the existing procedure, 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 6 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. In case of default in payment of sales tax by the due date mentioned on the electricity bill, besides other legal action by the concerned Sales Tax Collectorate, the concerned electric supply company shall disconnect the electricity connection of the unit, rules added.