FBR assures steel sector: Outstanding refund payments to be cleared

ISLAMABAD: The Federal Board of Revenue (FBR) has assured the documented steel sector that outstanding refund payments will be cleared and procedural bottlenecks removed for digitally compliant steel units across the country.

Sources told Business Recorder that the FBR officials and the steel sector held a meeting as part of the consultative process initiated by the FBR with the Pakistan Association of Large Steel Producers (PALSP) to finalize the sales tax rate for payment through power units and to clarify matters related to it.

The industry informed the tax authorities that the steel industry in particular is passing through a very challenging period.

In this situation, delays in income tax refunds further strain the working capital, severely affecting cash flows, which push manufacturers to financial distress. This needs to change, especially at a time when the current leadership of FBR is taking appreciable steps for reforms and to change things for the betterment of the taxpayers. Besides other officials and industry representatives, PALSP Chairman, Javaid Iqbal Malik, along with Syed Wajid I. Bukhari, CEO/Secretary General of the association, held a meeting with the FBR officials.

The industry proposed the Sales Tax for non-compliant units at Rs 35/ kwh and adjustable under Section 8B of the Sales Tax Act. The industry proposed the Sales Tax for compliant units at Rs 5/ kwh, which should be adjustable under Section 8B of the Sales Tax Act.

The industry proposed the definition of Compliant Units, i.e., units with at least 70 percent import portion of scrap and units that are 100 percent digitally compliant. The FBR is to issue a list of compliant units on the basis of its findings based on the last 12 months’ data of imports. The industry suggested that the list of compliant or non-compliant units should be issued/ updated on a monthly basis.

A senior Member of the FBR pointed out that some steel players were getting wrong inputs of items that have no relation to steel making. The input of all such items that are not used in steel making is being blocked by the FBR. The FBR authorities apprised that meter readings have been initiated across 7 captive units. Meters to be installed by FBR where missing. Hamid Ateeq directed Chief Operations, FBR to do the needful.

During the meeting, the FBR was directed to observe the outcome of the levy of sales tax through power units for six months. After that, if needed, changes could be made in the rates at that time. After one year, the whole initiative of levy of sales tax through power to be reviewed for future continuation.

Copyright Business Recorder, 2026