FBR cuts sales tax to PKR 5 per unit for qualifying steel producers
Only 31 of more than 200 steel manufacturers meet documentation, scrap-import and FBR integration requirements for the lower rate
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan’s Federal Board of Revenue has reduced the sales tax burden on qualifying large-scale steel manufacturers, potentially improving margins and competitiveness in an industry facing pressure from undocumented producers.
Under an FBR circular, registered iron and steel manufacturers, including melters, re-rollers and composite units, that meet specified scrap-import and tax-integration requirements will be charged sales tax of PKR 5 per unit of electricity consumed, according to the tax authority.
The concession applies to manufacturers whose imports of specified steel scrap — HS codes 7204.3000, 7204.4100, 7204.4990 and 7204.4940 — including direct purchases from EFS importers, accounted for more than 70% of their total purchases of the specified scrap during the preceding 12 months.
The manufacturers must also have their operations integrated with the FBR’s computerized system, the circular said.
The notification was issued under the Sales Tax Act, 1990, read with SRO 1245(I)/2026 dated July 31, 2026, and supersedes Sales Tax General Order 14/2026 dated Aug. 4, 2026.
The Pakistan Association of Large Steel Producers welcomed the move, saying the new tax framework could help revive Pakistan’s documented large-scale steel industry.
Only 31 manufacturers out of more than 200 steel producers operating in Pakistan have been recognized as meeting the prescribed documentation, scrap-consumption and FBR integration requirements, according to the association.
Qualifying producers will pay PKR 5 per electricity unit, compared with PKR 30 per unit for local-scrap-based production and PKR 35 per unit for captive or self-generated power, the association said.
The lower tax rate, combined with economies of scale, is expected to improve capacity utilization and support a recovery among compliant steel producers.
Four long-steel companies — Mughal Steel, Amreli Steels, Agha Steel and Ittefaq Steel — are listed on the Pakistan Stock Exchange.
“This landmark reform should restore fair competition, improve capacity utilization and encourage further investment in Pakistan’s documented steel industry,” the association’s secretary-general, Syed Wajid I. Bukhari, said.
The measure follows changes introduced through the Finance Act 2026 and subsequent FBR orders aimed at improving documentation and tax compliance in Pakistan’s steel sector.
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