ISLAMABAD: In response to ongoing concerns, a high-level meeting was held on Thursday under the chairmanship of Mr. Haroon Akhtar Khan, Special Assistant to the Prime Minister on Industries and Production. The meeting, attended by a delegation from the Pakistan Association of Large Steel Producers, focused on the sector’s core challenges and explored potential solutions aimed at improving regulatory oversight and enhancing tax compliance.
Mr. Khan acknowledged the steel industry’s immense potential and assured the delegation of the government’s full support. He emphasized that Prime Minister Shehbaz Sharif is committed to steering the country toward economic revival and that the steel sector is a critical component of this broader strategy to rejuvenate Pakistan’s industrial base.
He highlighted several key initiatives currently underway, including the revival of non-operational industrial units, the introduction of bankruptcy legislation, and efforts to safeguard investor interests. Mr. Khan further confirmed that proposals supporting the development of the steel sector would be incorporated into the upcoming federal budget.
Representatives of the steel industry expressed their readiness to play a constructive role in national development and voiced confidence that, with appropriate government backing, the sector could make a strong comeback.
Pakistan’s steel industry, a vital pillar of the country’s industrial development, continues to grapple with systemic challenges, including large-scale tax evasion, regulatory loopholes, and misdeclaration by undocumented operators. Despite its significant role in the national economy, the sector contributes disproportionately low tax revenue, resulting in an estimated annual loss of Rs 80–90 billion to the national exchequer.
Industry stakeholders have long raised concerns and proposed practical reforms to address these issues. However, meaningful implementation has remained elusive, largely due to administrative inaction and inefficiencies—particularly within Pakistan Revenue Automation Limited (PRAL). The persistent leakage of revenue has raised serious concerns about fiscal discipline and the long-term viability of the country’s industrial policy.
To address longstanding issues and safeguard national revenue, the delegation proposed several reforms. These included the proper classification of re-rollable scrap, which is currently being misclassified under headings meant for remeltable scrap. They argued that re-rollable scrap should be treated as a semi-finished product under heading 72.07, in line with its actual purpose and usage, to prevent losses from reduced duties and fraudulent tax claims.
They also recommended the advance collection of sales tax through electricity bills on a per-unit basis, with adjustments made against monthly liabilities. This mechanism, already supported under Section 3(1B)(b) of the Sales Tax Act, 1990, could be implemented without additional legislation and would help recover substantial lost revenue.
Furthermore, the delegation proposed that only re-rolling mills with a sanctioned and active electricity load of at least 4 MW be recognized as composite units. This measure would help distinguish genuine industrial operations from fictitious or under-reported entities, thus ensuring more accurate tax assessments.
Mr. Khan reaffirmed that addressing the challenges faced by the steel sector remains one of the government’s top economic priorities. He pledged prompt and concrete action to ensure long-term reform and sustainable growth in the industry.
