FBR Raises Minimum Steel Scrap Valuation From 55% to 60%

The Federal Board of Revenue (FBR) has raised the prescribed minimum valuation for certain remeltable iron and steel scrap from 55% to 60% of the reference price of steel bars when determining sales tax liability.

The adjustment was formalised through S.R.O. 2086(I)/2026, issued on November 5, 2026, exercising authority granted under the first proviso to clause (46) of Section 2 of the Sales Tax Act, 1990.

The revised requirement covers scrap classified under Pakistan Customs Tariff heading 72.04, provided it is supplied directly by an Export Facilitation Scheme-authorised recycled copper manufacturer-exporter to a registered steel melting unit.

Through the latest notification, the FBR has substituted the existing 55% threshold with 60% in the fifth entry of the valuation schedule, increasing the minimum prescribed supply value by five percentage points.

The amendment modifies S.R.O. 2402(I)/2025, dated December 10, 2025, which introduced minimum valuation benchmarks for domestically manufactured steel products for calculating sales tax under the ad valorem mechanism.

The relevant category of scrap was later incorporated into the valuation framework through S.R.O. 1829(I)/2026, issued on October 15, 2026, initially setting its minimum supply valuation at 55% of the applicable steel bar benchmark.

Following the latest revision, businesses covered by the notification must now use 60% of the steel bar reference price when determining the minimum taxable value of these scrap transactions.

For calculating the benchmark, the authorities rely on monthly average retail steel bar prices released by the Pakistan Bureau of Statistics (PBS) for Lahore, Karachi, Peshawar, Quetta, Rawalpindi and Islamabad, with Rs1,500 per metric tonne deducted from the average.

The revised framework increases the valuation base used to calculate sales tax, without introducing any change to the applicable statutory sales tax rate.

Additionally, the notification makes a textual adjustment by deleting the separating expression appearing in the description column of the valuation table's fifth entry.