The Federal Board of Revenue (FBR) has notified 99 registered iron and steel manufacturers that will now pay sales tax of Rs. 5 per unit of electricity consumed through their monthly electricity bills under a new tax collection mechanism.
The measure has been introduced under the Sales Tax Act, 1990, through SRO 1245(I)/2026, issued on July 31, 2026, and applies to registered melters, rerollers, and composite steel units integrated with the FBR’s computerized system.
According to the FBR, the notified manufacturers imported more than 70% of their scrap requirements during the previous 12 months under the specified Harmonized System (HS) codes, including purchases made directly from importers operating under the Export Facilitation Scheme.
Based on this criterion, the affected manufacturers will be required to pay Rs. 5 per unit as sales tax on electricity consumed, with the amount to be collected through electricity bills issued by their respective power distribution companies.
The tax authority said the list of notified manufacturers is not permanent and may be updated periodically by the FBR or on the recommendation of the relevant Commissioner Inland Revenue, depending on whether businesses continue to meet the prescribed eligibility criteria.
The FBR also stated that its field formations may independently review manufacturers for inclusion or removal from the notified list after examining their compliance with the applicable conditions.
Manufacturers facing difficulties under the new taxation mechanism have been advised to approach the concerned Commissioner Inland Revenue for review and appropriate relief, where justified.
The move is part of the FBR’s ongoing efforts to strengthen tax compliance, improve revenue collection, and streamline the monitoring of Pakistan’s iron and steel manufacturing sector.
