Pakistan News

40pc regulatory duty on steel bars, billets opposed

40pc regulatory duty on steel bars, billets opposed

KARACHI: Pakistan Iron and Steel Merchants Association (PISMA) on Tuesday opposed a proposal to impose 40 per cent regulatory duty on the imports of bars, billets and wire rods.

The association asked the Federal Board of Revenue (FBR) to formulate a balanced policy keeping in view the interests of the local industry, according to a statement.

At present local sales tax on steel bars is Rs6,530 per tonne, which is under 8pc of selling price. Whereas importers of steel bars are not just paying 10pc customs duty on an inflated price of $560 per tonne but also paying 15pc regulatory duty and 20pc sales tax.

The total per tonne cost of just sales tax and customs duty is Rs24,633. After adding 5.5pc as advance income tax the total impact comes to Rs29,000 per tonne.

The association was of the view that a fair regulatory duty should not be more than 5pc to enable all sectors of the industry to function on an equal footing.

On the contrary, Pakistan Steel Melters Association (PSMA) has urged the FBR to impose regulatory duty and sales tax, or special cess, on imported steel products to give protection to the local industry.

By increasing tax rates on imported steel products, the FBR could generate maximum revenues as domestic units would ramp up production. Consumers too would benefit as a competitive environment would push prices down, said a representative of PSMA.

Considering a conservative billet import figure of 250,000 tonnes, the FBR could raise an additional Rs3 billion at import stage, he said.

With 5 million tonnes of the country’s steel capacity, a 10pc increase would result in an additional 500,000 tonnes of domestic steel output, he added.

In the last fiscal year, sales tax was increased on steel melters by 75pc followed by a jump in energy prices by 74pc. This year 5pc regulatory duty was levied on steel scrap, which is a raw material for the industry.

Since the 15pc duty on steel finished products has been nullified due to a decrease in international prices by the same percentage, steel melters have been put at a huge disadvantage against imports.

The government would increase regulatory duty on import of steel billets by at least 25pc and 40pc on bars and wire rods, he hoped.

Published in Dawn, May 20th, 2015

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