PALSP Applauds Tax Reforms for Steel Industry in Budget 2024-25

PALSP Applauds Tax Reforms for Steel Industry in Budget 2024-25

The Pakistan Association of Large Steel Producers (PALSP) has lauded the strategic tax reforms introduced in the 2024-25 budget, heralding a significant boost for the steel industry.

The government’s measures, particularly the phased reduction of tax exemptions for Fata/Pata and the decision to include local scrap transactions within the tax net, are anticipated to rejuvenate the domestic steel industry and augment revenue streams, PALSP said in a statement.

PALSP, the most influential advocate for the steel sector, has expressed profound appreciation for the initiatives undertaken by Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb. These pivotal reforms are poised to address critical challenges within the steel industry, potentially increasing government revenues by hundreds of billions of rupees.

The phased reduction of tax exemptions for the former Fata/Pata regions will level the playing field, creating a win-win scenario for the industry, according to the PALSP. This measure is expected to bolster government revenue, promote thorough documentation, and establish a fair taxation system uniformly applicable across all regions and economic sectors.

Moreover, the exemption of local scrap from the sales tax levy to counteract fraudulent inputs and invoices is a highly commendable decision. This move will curb revenue leakages and foster fair competition within the market, the PALSP said.

The past few years have presented existential challenges for the steel sector due to an unprecedented economic crisis and a challenging business environment, the PALSP noted. Factors such as severe currency depreciation, exorbitant borrowing costs, and other economic pressures have led to a substantial increase in production costs, compelling many in the steel industry to operate at minimal capacity, with some plants shutting down altogether. Those that remain operational are facing significant losses and are being forced into substantial layoffs.

In this context, the government’s plan to rejuvenate the industry through concrete budgetary measures is highly encouraging. Effective implementation of these reforms is anticipated to lead to industrial and economic stability within the country, according to the PALSP.

The steel industry also appreciates the government’s pro-industry measures, including the reduction of power tariffs, the rationalization of interest and policy rates, albeit modestly, and the decrease in petroleum prices. The reduction of electricity tariffs by Rs10.69 per unit for the industry and export sector is a particularly welcome relief, enhancing the competitiveness of Pakistani industries in the global market.