The Federal Board of Revenue (FBR) has introduced a new procedure for collecting and adjusting additional sales tax on electricity consumed by steel manufacturers that generate their own power through captive plants or self-generation.

The FBR issued Sales Tax General Order No. 31 of 2026 – IR Operations on Thursday under the Sales Tax Act, 1990, read with S.R.O. 1245(1)/2026 dated July 31, 2026.

Under the new procedure, steel manufacturers covered by sub-clause (iv) of clause (a) of the notification must pay additional sales tax at the prescribed rate based on the electricity units consumed for steel production during each tax period.

Payment and Record-Keeping Requirements

The FBR has directed registered steel manufacturers to maintain records of electricity generated and consumed for manufacturing and report the units used during each tax period in their sales tax returns.

Manufacturers must generate a dedicated Payment Slip ID (PSID) challan for each tax period to deposit the additional sales tax. The amount must be calculated according to electricity consumption and paid by the fifth day of the following month.

The tax must be deposited without issuing or generating an invoice.

Adjustment Through Sales Tax Returns

The additional sales tax paid through the designated PSID challan and verified through the corresponding Computerized Payment Receipt (CPR) must be reported in Row 23c of the STR-7 sales tax return, titled “Additional Sales Tax on Electricity Supplied to Steel Melters and Re-Rollers.”

An equivalent amount must also be declared in Row 1a, titled “Input from Additional Sales Tax on Electricity Supplied to Steel Melters and Re-Rollers,” allowing the amount to be adjusted against output sales tax in accordance with the law.

However, the FBR has clarified that manufacturers cannot report the amount in Row 23c or claim an adjustment through Row 1a unless the additional sales tax has been deposited through the designated PSID challan and verified through the CPR.

FBR to Monitor Compliance

The relevant Commissioner Inland Revenue will verify electricity consumption using records maintained by registered manufacturers and the applicable provisions of the Sales Tax Act, 1990, including the conditions of the Thirteenth Schedule.

Manufacturers must also declare their production and supplies in their sales tax returns in accordance with the law and applicable rules.

The concerned Chief Commissioner Inland Revenue or Commissioner Inland Revenue will oversee implementation of the order and monitor payments by manufacturers covered under the procedure.

Any default, short payment or incorrect declaration of electricity consumption will be dealt with under the relevant provisions of the Sales Tax Act, 1990, and the rules made under it.

The FBR said the General Order would take effect retrospectively from July 1, 2026.