Pakistan Steel Mills Seeks Sales Tax Exemption on Raw Materials Import

Pakistan Steel Mills (PSM) through the Ministry of Production has sought sales tax exemption on the import of basic raw materials and ban on their exports, sources said on July 19, 2011.

Of the three proposals faxed to the Ministry of Production for tabling a summary before the Economic Coordination Committee (ECC) of the Cabinet meeting, an official correspondence of the PSM available with The News reveals, "PSM sought sales tax exemption on the imports of all basic raw materials, iron ore and coal."

According to the first proposal, the PSM suggested an exemption of sales taxes on the import of all basic raw materials that include iron ore and coal, while the second proposal recommends the sales tax of fixed value on local iron ore.

Finally, PSM also suggested imposition of a ban on all sorts of items that are consumed as basic raw materials in the PSM products.

Pakistan Steel Mills had already requested the Federal Board of Revenue (FBR) to reduce the sales tax and abolition of special excise duty to boost steel products, reveals a letter of the PSM.

In order to boost up sales of Pakistan Steel and generate additional government revenue through duties and taxes in the remaining period of the current financial year, the facility, especially formulated for imports, may also be extended to domestic supply industries, it added.

The letter also said, "Local/domestic industries also need this facility as specifically sales of Pakistan Steel have dropped drastically since June 20, resultantly the collection of duties and taxes has also been badly affected, which Pakistan Steel collects on behalf of the FBR."

According to the provisional figures, the PSM incurred losses (Rs48 billion and payable liabilities of Rs55 billion) from July 2008 to May this year, have mounted over Rs103 billion, but interestingly, the forensic report will only dig out the culprits responsible for Rs26.5 billion losses.