Electricity consumed by steel manufacturers: FBR issues new procedure for payment of additional sales tax

The Federal Board of Revenue (FBR) has introduced a new procedure to handle additional sales tax on electricity used by steel manufacturers who generate their own power. This comes in the form of Sales Tax General Order No. 31 of 2026, issued on Thursday.

Under this order, steel manufacturers using captive power or self-generated electricity must pay additional sales tax based on the electricity units they consume for steel production during a specific tax period. The amount payable is determined by the steel manufacturer and should be deposited by the 5th day of the following month, without needing any invoice.

The documentation for this tax payment involves creating a special PSID challan/CPR, which is only available to steel manufacturers under this category. Upon payment, the amount is reflected in the STR-7 Row 23c, "Additional Sales Tax on electricity supplied to Steel Melters and Re-Rollers", of the sales tax return. This amount will also be counted as input tax, reducing the output sales tax for the same period, in accordance with the Sales Tax Act, 1990 and the Thirteenth Schedule.

The Commissioner Inland Revenue responsible for the area will verify the electricity consumption data maintained by the registered steel manufacturer, ensuring compliance with the Sales Tax Act and the terms set out in the 13th Schedule. The registered person must also accurately declare their steel production and supplies in the sales tax return, following the rules laid out in the Sales Tax Act and relevant regulations.

The FBR will monitor the implementation of this new procedure, with penalties for default, late payments, or incorrect declarations of electricity units. This new order will be in effect from July 1, 2026.