Steel melters concerned over sale of products manufactured in non-tax area

LAHORE: The Pakistan Steel Melters' Association (PSMA) has expressed its concern over the sale of steel products manufactured in the non-tax area (formerly Federally Administrated Tribal Area/ Provincially Administrated Tribal Area (FATA/PATA) to taxable area that makes the products uncompetitive manufactured in taxable area.

PSMA sources told Business Recorder that the government had allowed all kinds of tax exemptions to the steel industry/furnaces located in FATA/PATA, but the products manufactured in these areas are usually sold in the taxable area. The furnaces located in the tax area have to pay different taxes amounting to Rs 14,510/ per ton including Rs 12,410 per ton on account of sales tax, Rs 1100/ income tax and Rs 1000 other taxes. Consequently, the furnaces located in the taxable areas are suffering losses, particularly when the products manufactured in FATA/PATA are sold in other parts of the country. The government should ensure level playing field to the industry and restrict the transportation and sale of steel products in other parts of the country.

The sources further alleged that the steel traders and steel scrap dealers are not registered in the tax net and thus evading huge amount of taxes. There are good number of scrap dealers in two major scrap markets like Misri Shah in Lahore and Sher Shah in Karachi besides other parts of the country. If these traders are registered in the tax net it would help increase the government revenue, the sources added.

The government has allowed some relief to the ship breaking industry including 5 percent in Regulatory Duty, 2 percent in income tax, and 2 percent in the additional customs duties which is damaging the steel industry in the country. The government should also provide similar relief to the steel melting industry, the sources said.

Copyright Business Recorder, 2020