Steel melters for abolishing WHT on local scrap purchases

LAHORE: The Pakistan Steel Melters Association (PSMA) has urged the government to abolish withholding tax on local scrap purchase and rationalise power tariff in the upcoming federal budget.

Addressing at a news conference on Monday, Chairman PSMA Mian Ahmad Hassan presented industry’s proposals for the federal budget 2026-2027 aimed at reforming and reviving the domestic steel sector. He emphasised that immediate implementation of these reforms is vital to safeguard the local steel industry, curb tax evasion, and promote domestic production.

Outlining the industry’s core demands and proposals, he said to ensure transparent sales tax recovery, an across-the-board advance sales tax should be collected via electricity bills at a rate of Rs 30 per electricity unit from all steel melters. This collection must fall strictly under the existing normal 18 percent sales tax regime and remain adjustable against the final liability in the sales tax return.

He proposed that the withholding of income tax on the purchase of local scrap should be completely abolished. Removing this tax barrier will support local melters who are saving valuable foreign exchange by utilising domestic raw materials instead of relying on imports, he viewed.

Moreover, he added that to prevent tax evasion, small furnaces and those installed within sugar mills must be taxed according to their panel and transformer capacity. Regulatory duty on imported steel billets should be substantially increased to offset the high domestic power tariffs and protect the local industry.

Speaking about the power tariff rationalisation, the PSMA chairman proposed that electricity rates for melters need to be reduced to reflect that power serves as a primary raw material in the production of quality graded steel. He further proposed that all steel imports must be routed exclusively through sea-ports to effectively curb smuggling and under-invoicing occurring across land borders.

Calling for phasing out exemptions, he said the planned reduction of tax exemptions in FATA/PATA and Gilgit-Baltistan must be strictly implemented to ensure a level playing field for all market players while customs duties on high-quality industrial scrap should be reduced to encourage the local manufacturing of specialised graded steel.

Copyright Business Recorder, 2026