The tax authority adds 18 steel-related HS codes to the list restricting input tax adjustment for steel melters and re-rollers.
ISLAMABAD, September 29, 2026: The Federal Board of Revenue (FBR) has specified additional Harmonised System (HS) codes for restricting input tax adjustment by steel melters and re-rollers, clarifying the treatment of finished and semi-finished steel products under the existing sales tax framework.
The FBR issued Sales Tax General Order (STGO) No. 6 of 2026 (Operations), adding a list of steel-related HS codes to Annexure-II of STGO No. 12 of 2022, dated April 7, 2022.
The order refers to Section 8(1)(a) of the Sales Tax Act, 1990, which restricts input tax adjustment on goods and services used for purposes other than making taxable supplies. It also cites Sections 8(1)(f) and 8(1)(i), under which tax credit is inadmissible on goods or services unrelated to a taxpayer’s taxable supplies.
FBR adds 18 HS codes to existing list
According to the order, the FBR had previously restricted input tax adjustment on purchases falling under specified HS codes in cases involving manufacturers of oil and ghee, as well as steel melters and re-rollers.
The latest order adds 18 HS codes, numbered 431 to 448 in Annexure-II, covering various finished and semi-finished iron and steel products that the FBR considers unrelated to the activities of steel melters.
The additional codes cover the following categories:
• HS Code 7207: Semi-finished products of iron or non-alloy steel.
• HS Codes 7208–7212: Flat-rolled products of iron or non-alloy steel, including different widths and categories of hot-rolled, cold-rolled, clad, plated and coated products.
• HS Codes 7215–7217: Other bars and rods, angles, shapes, sections and wire of iron or non-alloy steel.
• HS Codes 7218–7220: Stainless steel in primary forms and semi-finished products, along with flat-rolled stainless steel products of different widths.
• HS Codes 7224–7229: Other alloy steel in primary forms and semi-finished products, as well as flat-rolled products, bars, rods, angles, shapes, sections and wire.
Immediate implementation
The FBR has directed that the STGO take effect immediately. It has also stated that any hardship arising from its implementation may be brought to the attention of the relevant Commissioner Inland Revenue (IR).
The order reinforces the tax authority’s approach of limiting input tax credits to purchases connected with taxable supplies in accordance with the Sales Tax Act, 1990.
Manufacturers and other affected businesses will need to examine the specified HS codes when determining the admissibility of input tax adjustment on their purchases.