Corporate Real Estate News

Islamabad | ReNews Corporate Desk The Federal Board of Revenue (FBR) has set out how steel manufacturers using captive power or self-generated electricity must calculate, pay and adjust additional sales tax on electricity consumed in production. Sales Tax General Order No. 31 of 2026, issued under the Sales Tax Act, 1990, and S.R.O. 1245(1)/2026, applies to manufacturers covered by sub-clause (iv) of clause (a) of the notification. The additional sales tax is to be calculated at the prescribed rate according to the electricity units used for steel manufacturing during each tax period. The procedure requires registered manufacturers to keep records of electricity generated and consumed for production and report the relevant units in their sales tax returns. For each tax period, they must pay the tax through a special PSID challan made available for steelmakers operating on captive power or self-generation. Payment is due by the fifth day of the following month and must be made without issuing or generating an invoice. The tax paid must be reported in STR-7 Row 23c, “Additional Sales Tax on Electricity Supplied to Steel Melters and Re-Rollers.” An equivalent amount may be claimed as input tax in Row 1a for adjustment against output sales tax, subject to the law. The FBR has tied that adjustment to proof of payment: no amount may be entered in Row 23c or claimed through Row 1a unless the special PSID payment has been deposited and verified through the corresponding computerized payment receipt (CPR). The Commissioner Inland Revenue concerned will verify the electricity units declared against the manufacturer’s records and applicable legal requirements, including the conditions of the Thirteenth Schedule. Manufacturers must also declare production and supplies in their returns. Chief Commissioners and Commissioners Inland Revenue are responsible for implementing and monitoring the procedure. Defaults, short payments or incorrect declarations of electricity consumption may be addressed under the relevant provisions of the sales tax law. Although the order was issued on October 29, 2026, the FBR said it takes effect from July 1, 2026.