Steel sector: New procedure to charge sales tax issued

ISLAMABAD: Finance Act 2026 has issued a new procedure for the steel sector to charge sales tax on the basis of per unit electricity consumption of steel melters, steel re-rollers and composite units.

According to the Finance Act 2026 issued on Monday, in the case of steel melters, steel re-rollers and composite units, the tax shall be collected on the basis of per unit electricity consumption including use of electricity produced by a captive power plant or through any other alternative source of energy at the rate or rates as prescribed by the Board, through notification in the official Gazette. The tax so collected shall be an adjustable input tax, to be claimed in the return of the month in which such payment is made.

The Board may prescribe a lower per unit rate or rates of electricity consumption on the basis of input tax paid on imports or other invoices issued through electronic invoicing system, digitally issued invoices for compliant and digitally integrated steel melters, re-rollers and composite units to minimize creation of refunds.

The per unit sales tax shall be determined by the Board on the basis of minimum notified price under clause (46) of section 2 of this Act and the industrial benchmarks of consumption of electricity against per ton production of steel Products, Finance Act 2026 added.

Copyright Business Recorder, 2026