FBR Expands Rs5 Electricity Tax On Steel Manufacturers

The Federal Board of Revenue (FBR) has widened the list of iron and steel manufacturers required to pay sales tax at Rs5 per unit of electricity consumed, with the tax to be recovered through electricity bills issued by the relevant power distribution companies (DISCOs).

The tax authority issued Sales Tax General Order (STGO) No. 22 of 2026 on Monday, amending STGO No. 16 of 2026 and bringing four additional registered iron and steel manufacturers under the electricity-based sales tax regime.

The newly included businesses comprise melters, re-rollers and composite manufacturing units that fulfil the eligibility conditions set by the FBR.

Under the order, manufacturers qualify for inclusion if their direct imports of scrap under specified HS codes, along with purchases made through the Export Facilitation Scheme (EFS) and from importers, accounted for more than 70% of their total scrap purchases during the previous 12 months.

The relevant scrap categories are covered under HS codes 7204.3000, 7204.4100, 7204.4990 and 7204.4940.

The manufacturers must also have their operations properly integrated with the FBR’s computerised system.

The FBR said eligibility was assessed according to criteria established under the relevant statutory regulatory order, including factors such as scrap consumption, electricity used in steel production and imports of scrap under the specified HS codes.

Manufacturers that satisfy the requirements will be charged sales tax at Rs5 for every unit of electricity consumed, with the amount collected through their respective DISCO bills.

The revised order takes effect immediately and applies to all electricity connections belonging to the notified taxpayers.

The FBR has also instructed its field formations that the list of eligible manufacturers can be updated periodically, either directly by the Board or following recommendations from the relevant Commissioner Inland Revenue (CIR).

Both the FBR and its field formations may independently review whether a registered manufacturer fulfils the conditions required for inclusion in, or removal from, the list.

Taxpayers facing difficulties or hardship because of the implementation may approach their concerned Commissioner Inland Revenue for consideration of the matter.