Pakistan’s Steel Industry advises the Govt to allow input tax adjustment on sales tax to exempted projects

October 5, 2020: The National Steel Advisory Council (NSAC) in a letter to Mr. Muhammad Javed Ghani, who is currently serving as the Chairman FBR, highlighted the importance of Pakistan’s steel sector and its role in fostering the Prime Minister’s vision of industrializing Pakistan and turning it into an export oriented country.

The Secretary General of National Steel Advisory Council, Mr. Irshad Mowjee, urged the Govt to minimize the existing anomalies in current rules/policies specially pertaining to Tax regimes. He specifically highlighted the input tax adjustment in case of supplies to exempted projects including Hospitals, Power Plants and Gwadar special projects further mentioning that the imposition of FED in Sales Tax Mode w.e.f July 1^st 2019 should have solved this issue.

But, on the contrary, the industry is not allowed to adjust the tax paid on manufacturing of goods which are supplied to exempted projects. While the industry is not allowed to deduct sales tax on supplies to exempted projects, this anomaly puts the steel industry in a highly uncomfortable position and would ultimately account for massive unemployment in the country simultaneously discouraging industrialization.

NSAC’s Secretary General further advised that the Taxes and Duties on all inputs including the raw materials (inclusive of wastages) must be allowed as input adjustments in the monthly sales tax return. He further said that this will discourage exempted imports made for specific projects and promote industrialization in the country.

The National Steel Advisory Council (NSAC) was constituted to ensure sustainable growth and development of the steel industry of Pakistan by advising the Government on key policy matters collectively beneficial for the steel industry as well as the Government.

The letter was also copied to key authorities in the Government, including Federal Ministers, Advisors and various personnel of the Federal Board of Revenue(FBR).

Press Release