FBR Sets Steel Sales Tax Rates as Low as Rs5

The Federal Board of Revenue (FBR) has introduced a reduced sales tax rate of Rs20 per electricity unit for steel melters and composite steel manufacturing units located in erstwhile FATA and PATA, provided they use locally sourced remeltable scrap.

Through SRO 1664(I)/2026 issued on Friday, the tax authority amended SRO 1245(I)/2026, updating the electricity consumption-based sales tax rates for various categories of steel manufacturers.

Under the revised rules, steel re-rollers producing steel bars will be charged sales tax at Rs30 per electricity unit consumed, regardless of whether their raw materials are imported or purchased locally.

However, steel melters and composite units operating in erstwhile FATA and PATA will qualify for the lower rate of Rs20 per unit if they use local remeltable scrap.

According to the FBR, this concession maintains the reduced sales tax treatment granted to these territories under serial number 89 of Table-I of the Eighth Schedule to the Sales Tax Act, 1990.

Steel re-rollers manufacturing steel bars in erstwhile FATA and PATA will also be charged Rs20 per electricity unit, irrespective of whether their raw materials are imported or locally sourced.

Rs5 Tax Rate for Eligible Steel Manufacturers

The FBR has also set a further reduced sales tax rate of Rs5 per electricity unit for qualifying steel units in which imported raw materials or remeltable steel scrap purchased directly from individuals or businesses registered under the Export Facilitation Scheme (EFS) account for more than 70% of the total during the preceding 12 months.

The authority has established separate eligibility rules for newly established businesses and steel manufacturing units resuming production after a period of closure.

For these businesses or registered persons, qualification for the Rs5-per-unit sales tax rate will be assessed based on their imports or purchases during each quarter, the FBR stated.