Steel sector sales tax to be linked with electricity use under Finance Bill amendments

The National Assembly Standing Committee on Finance and Revenues has finalised amendments proposing tax collection from steel melters, steel re-rollers and composite units on the basis of per-unit electricity consumption.

According to a news report, the proposal covers electricity obtained from the grid as well as power generated through captive power plants or any other alternative energy source.

Under the proposed mechanism, the tax will be collected at rates prescribed by the Board through notification in the official gazette.

The tax collected will be treated as adjustable input tax and may be claimed in the return for the month in which the payment is made.

The amended proposal also allows the Board to prescribe lower per-unit electricity consumption rates for compliant and digitally integrated steel melters, re-rollers and composite units.

The lower rate may be determined on the basis of input tax paid on imports or invoices issued through the electronic invoicing system, including digitally issued invoices.

The proposal says this mechanism is aimed at minimising refund creation.

The per-unit sales tax will be determined by the Board based on the minimum notified price under Clause (46) of Section 2 of the Act and industrial benchmarks of electricity consumption against per-ton production of steel products.