Iron, steel manufacturers: FBR extends voluntary incorporation deadline

ISLAMABAD: The Federal Board of Revenue (FBR) has extended the date of voluntary incorporation of business entities for corporatisation within the iron and steel sector from July 31, 2026 to August 10, 2026.

In this connection, the FBR has issued instructions to the Chief Commissioners Inland Revenue of Large Taxpayers Offices (LTOs), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs) on Thursday.

According to the FBR’s instructions, the FBR has granted extension in time for voluntary corporatisation of iron and steel manufacturers. The remaining terms and conditions of the last sales tax general order (STGO) 10 of 2026 ibid shall remain the same.

The FBR directed that as a consequence of Board’s documentation drive, a considerable number of Individuals and Association of Persons manufacturing iron and steel intend to incorporate themselves as companies limited by shares, as mirror image of proprietorship or association of persons.

This voluntary incorporation is a welcome step towards documentation and digitalisation of the economy in general and the iron and steel sector in particular. However, this transition has created a short-term difficulty regarding continuations of existing sales tax declaration, adjustment of input tax, output tax, refunds and payment of liabilities.

Therefore, in exercise of the powers conferred under section 55 of the Sales Tax Act, 1990 and section 43 of the Federal Excise Act, 2005, for removal of this difficulty faced by Iron and Steel Manufacturers being Individuals and Association of Persons (as defined in Income Tax Ordinance, 2001) in becoming corporate entities limited by shares, the FBR has prescribed and implemented, the Standard Operating Procedures (SOPs).

Under the procedure, the National Tax Number (NTN) allotted to the newly formed corporate entity shall be linked with the previous/existing NTN/STRN for the purpose of filing declarations, adjustment of input tax and calculation of sales tax liability. This facility shall be available only to the entities specifiedsubject to fulfilment of the following conditions:

This facility shall only be available to the entities who voluntarily

corporatise and apply to the Board for availing the benefit of this STGO, the FBR said. The individual business shall be converted into a wholly owned company in terms of section 95 of the Income Tax Ordinance, 2001.

An AOP shall be converted into a wholly owned Private Limited Company as per conditions laid down in section 96 of the Income Tax Ordinance, 2001.

The predecessor and successor entities shall be jointly and severally

liable for retention of record and documents required to be maintained

under Sales Tax Act, for a period and purposes as specified under section24 of the Sales Tax Act, 1990 and section 17 of the Federal Excise Act, 2005 for provision of record before the authorities of IR and personal appearance as and when required by him for the purposes specified under the provision of sales tax and federal excise law.

Another condition is the payment of adjudged amount of arrears on account of sales taxand federal excise or the short-paid amount of tax and duty as the case may be. The units will respond adjudication proceedings in respect of arrears detected or to be detected on account of sales tax and federal excise

pertaining to the period before or after voluntary corporatisation.

The Board shall decide the application within seven (07) days of receipt ofthe application, and in case of approval, the name of the entity shall be addedto relevant Table, the FBR maintained.

The facility for linking the previous NTN/STRN with the NTN/STRN of the newly formed corporate entity shall remain available till December 31, 2026 and the amount of excessive input/carried forward and stocks against thereof, shall be utilized by the entity voluntarily opting for corporatisation till that date. From January 1, 2027, new NTN/STRN shall completely and wholly be operative for the newly incorporated entity and no further activity/transaction against the old NTN/STRN shall be carried out after December 31, 2026, the FBR added.

Copyright Business Recorder, 2026