According to the FBR, ship breakers were required to pay sales tax on the import of ships for breaking @ Rs 8,000 PMT calculated @ 70.5% of Least Displacement Tonnage (LDT) of the ships imported for breaking. This sales tax was payable in lieu of local supply of re-rollable scrap, Through amendments in Sales Tax Special Procedure Rules, 2007 ship breakers are now required to pay sales tax @ Rs 8,500 PMT which is to be calculated @ 80% of LDT of oil tankers and gas carriers imported for breaking and @72.5% of LDT in case of other ships.
This payment of sales tax shall be final discharge of liability of ship breakers in lieu of local supply of re-rollable scrap as well as other supplies of materials obtained during ship breaking. Steel melters, re-rollers and ship breakers operating' under Sales Tax Special Procedure Rules, 2007 have also been granted exemption from further tax chargeable under sub-section (lA) of section 3 of the Sales Tax Act, 1990 by amending SRO 648(1)/2013 through SRO 585(1)/2017, dated 01.07.2017.
Value of imported re-rollable scrap has been fixed at US $480 PMT for the purposes of charging sales tax to correspond with value of steel products. Amendments III Sales Tax Special Procedure Rules, 2007 have been notified through SRO 583(I)/2017, dated 01.07.2017. Steel sector operating under Sales Tax Special Procedure Rules, 2007 is now required to pay sales tax @ Rs 10.50 of the units of electricity consumed subject to adjustment of sales tax paid on the import of remeltable scrap.
Payment of sales tax @ Rs 10.50 per Kwh shall be final discharge of liability by steel melters and re-rollers operating under Sales Tax Special Procedure Rules, 2007 including their pre-heating sections operated through fuels other than electricity. Rate of sales tax on import of scrap by melters and re-rollers operating under Sales Tax Special Procedure Rules, 2007 continues to remain at Rs 5,600 per metric ton whereas for melters, re-rollers and others not operating under Sales Tax Special Procedure Rules, 2007 are required to pay sales tax at Rs 8,400 PMT on import of scrap. Automated adjustment of sales tax paid on import of scrap has been provided through STGO 119 of 2017, dated 02.08.2017, the FBR added.
Copyright Business Recorder, 2017