RIZWAN BHATTI

KARACHI: The federal government has proposed to increase sales tax for steel sector by 17 percent to Rs 10.5 per unit of electricity for the next fiscal year 2017-18.

Steel sector is currently paying sales tax on the basis of consumption of electricity at the rate of Rs9 per unit of electricity. However, Finance Minister Ishaq Dar in his budget speech has proposed to increase the sales tax for the steel sector by 16.6 percent or Rs 1.5 per unit of electricity.

In the federal budget 2017-18, the existing rate of Rs 9 per unit of electricity is proposed to be enhanced to Rs 10.50 per unit and the corresponding increase will be made in ship-breaking and other allied industries.

Although, the government has proposed to enhance sales tax, the finance minister has also promised to promote the ease of doing business by resolving the issues pertaining to steel industry in consultation with the industry.

Industry sources said the proposed increase in sales tax for steel sector is absolutely against the industry demand. The industry was seeking some reduction in sales tax from current rate of Rs 9 per unit to Rs 4 per unit, they added.

They said definitely, with the proposed surge in sales tax, the rate of steel products will increase in the domestic market. The impact of 17 percent increase in sales tax will be about Rs 1,200 per ton to Rs 2,000 per ton on different steel products.

They said the domestic industry is already facing several challenges particularly cheap import of steel products and after hike in sales tax, domestic products will become more costly.

The industry has urged the federal government to increase Federal Excise Duty (FED) on the import of wires and other steel products to support the domestic steel industry.