The Federal Board of Revenue (FBR), the top federal government body in Pakistan that investigates taxation has proposed to hike increase in sales tax on power consumed by steel industry to Rs 15/electricity unit from Rs 10.5/unit, to bring it at par with other sectors.
As per reports, the current sales tax on power for steel smelters is much lower than the standard rate. The sales tax on power for smelters, rolling mills and ship breakers is also quite low as compared to standard sales tax rate of 17% for the other industries.
According to a large mill in Karachi, “presently sales tax calculated by the FBR on per unit electricity consumption is for around 800 units for one metric tonne hot metal produced.
There are chances that the Govt may put this additional burden on Industries from the coming month or in the budget declaration which will be declare in current month. Thus, with the rise in taxes, local steel prices are expected to increase almost by 3,000-4,000 PKR (USD 26-35 ). These developments would adversely affect consumers as the producers would have no other option but to pass on the added burden, he added”
The current rebar prices by large mills in Karachi, Pakistan were reported at about 96,000-97,000 PKR (USD 830-838) for Grade 60, 12mm & including taxes. This is expected to cross the levels of 100,000 PKR (USD 867), if the proposed hike in sales tax imposed by the Govt.
Further, local Concast Billets for Grade60 reported at about 80,000-81,000 PKR (USD 691-700), including taxes.
As per producers, local steel demand in Pakistan is strong currently as stockiest have remained active. Alongside, work on several ongoing projects in the country has been expedited before Ramadan which began from 15th of May and will end in mid-Jun 2018. Also, mills stated considerable shortage of labour in plants due to ongoing harvesting season which has led to falling productions and rise in prices.
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