KARACHI: Steel melters paying sales tax through electricity bills would be eligible to adjust their paid sales tax at import stage as per the procedure issued by the Federal Board of Revenue (FBR).
The FBR said adjustment would be applicable only to such steel melting units, which were paying sales tax through their electricity bills. The FBR has defined payment of sales tax by steel sector through Sales Tax Special Procedure Rules, 2007, and under Rule 58H, the steel melting units are required to pay their sales tax through consumption of electricity units.
However, the FBR said the steel mills operated by sugar mills or other persons using self-generated electricity and steel melting and re-rolling units which have opted to pay sales tax on ad valorem basis would not be entitled to such adjustment.
Under Rule 58H (2A) of the Special Procedure Rules, adjustable sales tax at Rs5,600 per metric ton was imposed in the case of import of re-meltable iron and steel scrap. In the budget 2017-18 the rule was amended and now such rate stands applicable only in cases of steel melters, re-rollers and MS rollers and composite units of steel melters and re-rollers and other importers who pay tax at Rs8,400 per metric ton.
The FBR said adjustment would be allowed only on import of re-meltable iron and steel scrap, which has actually been consumed in the production of steel products. The consumption would be determined on the basis of consumption of 800 electricity units for the production of one metric ton of ingots/billets allowing five percent wastage, the FBR added.
The revenue body asked Pakistan Steel Melters Association to provide a list of steel melters having single electricity meter and composite units having both remelting and re-rolling facility.
The association was further advised to provide a list of members with details of National Tax Number/Sales Tax Registration Number, electricity consumer number, name of distribution companies, composite or otherwise, etc.
The FBR said adjustment would be allowed to the member of steel association on verification by Regional Tax Offices/Large Taxpayers Units. According to the procedure, the record of goods declaration (GD) against which adjustment has been allowed would be maintained by the FBR’s computerised system. Adjustment would only be allowed on the GDs filed from July 1, 2017, the FBR said.
Besides, the commissioners of Inland Revenue have been asked to issue a sales tax adjustment certificate of the unadjusted amount by August 15, 2017 in those cases where unadjusted sales tax was available on the basis of GDs filed up to June 30, 2017.