FBR sets new sales tax procedure for steel makers on captive power

The Federal Board of Revenue (FBR) has issued a new procedure for the payment and adjustment of additional sales tax on electricity consumed by steel manufacturers operating on captive power or self-generation. It did so through Sales Tax General Order No. 31 of 2026, issued on Thursday.

The order is issued under the Sales Tax Act, 1990, read with S.R.O. 1245(I)/2026 dated July 31, 2026. Business Recorder reported that it notifies the Additional Sales Tax Challan and a computerized payment receipt for these manufacturers.

Covered steel manufacturers must pay additional sales tax at the prescribed rate, based on the units of electricity consumed for steel manufacturing in each tax period. Registered persons must keep records of the electricity generated and consumed for manufacturing, and declare the units consumed in their sales tax returns.

For each tax period, registered persons must generate a special PSID challan and CPR, which is available only to covered steel manufacturers. The tax must be deposited by the 5th day of the following month, and the payment must be made without issuing or generating an invoice.

The amount must be shown in STR-7 Row 23c for the tax period to which the electricity consumption relates. An equivalent amount must be shown in STR-7 Row 1a for adjustment against output sales tax as per law.

No amount may be shown in Row 23c or adjusted through Row 1a unless the tax was deposited through the special PSID challan and verified through the CPR.

The concerned Commissioner Inland Revenue will verify the electricity units consumed against the registered person's records. The Chief Commissioner or Commissioner Inland Revenue will ensure implementation and monitor payments.

Any default, short payment or incorrect declaration of electricity units will be dealt with under the Sales Tax Act, 1990 and its rules. The FBR said the General Order takes effect from July 1, 2026.