Steel Sales Tax: Electricity-Based Collection under Finance Act 2026

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A steel unit using captive generation is not outside the amended collection provision simply because it buys less electricity from the grid. The new section 6(2) proviso expressly includes captive power and other alternative sources of energy.

Collection depends on notified rates

The provision covers steel melters, steel re-rollers and composite units. Collection is based on electricity consumption at rates prescribed by FBR through a Gazette notification. The Act supplies the mechanism; it does not supply a single per-unit figure that every mill can immediately use.

How the payment enters the return

The amount collected is adjustable input tax, claimed in the return for the month in which payment is made. It should not be presented as a final settlement of all sales tax on the unit's production or as an automatic cash refund.

Digitally integrated units

FBR may prescribe lower per-unit rates taking account of input tax paid on imports or qualifying digitally issued invoices for compliant and integrated units, to minimize refund accumulation. This is a power to prescribe relief, not an unconditional discount.

The per-unit amount is linked to minimum notified prices and industrial electricity-consumption benchmarks per tonne. Keep generation and consumption records, production reconciliations, import tax evidence and electronic invoices together. Before modifying a costing model, verify the applicable notification, its commencement date and treatment of the unit's energy sources.

Legislation checked

Finance Act 2026, PDF pages 10-10. Source-text review: 14 October 2026. The Act generally commences on 1 July 2026, subject to express exceptions. Any required implementing notification must also be checked before applying a concession.