The melting industry has sought immediate release of advance sales tax’s pending refund amount to manage its working capital.
Pakistan Steel Melters Association, in a letter to the Federal Board of Revenue Chairman requested the authority to immediately release the pending refund claims of advance sales tax, which was being collected on import of scrap at port stage and supposed to be adjusted in electricity bills of the steel plants.
The PSMA informed the FBR that accumulated pending refund claims of domestic melters had surged to millions of rupees and only seven companies’ amount was accumulated to approximately PKR 270 million till the mid of November 2014. The association said that the situation had created severe liquidity crisis for the steel sector due to the stuck of huge amount with FBR, which was partially adjusting the collected amount and the remaining amount of advance sales tax was pending.
The steel industry believed that the refund issue had worsen further since the amount of advance sales tax on raw material had increased to PKR 5,600 per ton in budget FY15 compared to PKR 1,600 per tonne previously, as current tax rate was higher than the payable General Sales Tax on steel melters’ electricity bills, the letter said.
It said that if the refund issue was not resolved immediately, several plants might be forced to shutdown due to severe cash flow crisis. As it is imperative that we have to import scrap for our consumption, the additional money being withheld is fast eroding our working capital.
Source – Business Recorder
Yaang Pipe Industry