Although the government has exempted the general sales tax (GST) on supplies of domestic steel to the Gwadar Free Zone, steel manufacturers have lamented that they lack the mechanism needed to avail this exemption.

Talking to The Express Tribune, Pakistan Association of Large Steel Producers (PALSP) Secretary-General Wajid Bukhari highlighted that the sector was trying to secure orders for China-Pakistan Economic Corridor (CPEC) megaprojects, such as Gwadar Airport.

He was of the view that providing locally produced steel to these mega projects would benefit the local companies as well as the government and the general public.

Appreciating government’s decision to exempt GST on supplies of domestic steel, Bukhari urged the leadership to introduce a proper mechanism to enable steel companies to benefit from this incentive.

The local steel industry had not been able to benefit from it, as it was yet to supply steel to these mega projects, he said.

“This is because the Sales Tax Rules do not allow apportionment of input tax on raw material for the exempted supplies,” he added.

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Gwadar Free Zone also includes the under-construction Gwadar Airport, Gwadar Port as well as some other important projects. “If local steel sector steel is not considered in CPEC projects, we will not be able to benefit from these schemes,” he noted.

“Additional demand creates more job opportunities in the steel sector,” Bukhari maintained, lamenting that this had not yet happened.

According to him, one of the reasons behind this was that Chinese companies were not acquiring steel from Pakistani makers. Although they were buying cement from Pakistani manufacturers, he pointed out.

Published in The Express Tribune, December 3rd, 2021.

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