Steel tax now tied to power use
The Pakistani government has introduced a new sales tax mechanism for steel manufacturers, linking tax liability directly to per-unit electricity consumption. Starting July 2026, the policy aims to improve tax compliance and documentation across the sector, with tiered rates based on scrap sourcing.
Why it matters
This policy shift represents a significant effort to formalize the steel industry and broaden the tax base in Pakistan, potentially impacting manufacturing costs and industry competitiveness.
--> Home Business Steel tax now tied to power use FBR targets per-unit consumption, sets Rs30 rate for most, Rs5 for scrap importers
facebook --> twitter --> whatsup --> linkded --> email MORE (3) Messenger Whatsapp --> Steel tax now tied to power use ISLAMABAD: The federal government has introduced a new mechanism for the collection and payment of sales tax from electricity-based steel melters, re-rollers and composite units, linking tax liability directly to per-unit electricity consumption in a move aimed at improving tax compliance in the sector.
The new tax regime will also apply to units using self-generated electricity, including power produced from bagasse by sugar mills or other sources. All relevant units will fall within its ambit regardless of the nature of their electricity connection, ensuring a uniform application across the industry.
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