State losing tax revenue from steel industry

Monday, 29 May 2017 00:57 - - {{hitsCtrl.values.hits}}

The use of low quality steel, besides being detrimental to the construction of houses and buildings, is also causing a loss of tax revenue, the steel industry warned.

Sources said a massive tax fraud in the local steel industry is causing an annual loss of nearly Rs. 5 billion for the State.

Manufacturers do not pay the NTB and VAT taxes, but the relevant authorities ignore complaints due to the gratifications they are receiving from manufacturers.

The fraud relates mainly to reinforcing bars, whose monthly sale is around 45,000 tonnes.

For each tonne sold, 2% NTB and 15% VAT have to be paid, but the sellers claim a mere 30% of the actual sales in their documentation.

The actual sales translate to a required tax payment of more than Rs. 550 million per month, but only about Rs. 250 million is paid, causing an annual loss of close to Rs. 3.6 billion.

In addition, sales figures of a steel cage and L-angles, etc. too are manipulated to deny nearly Rs. 120 million in taxes

Furthermore, the income tax is calculated according to the manipulated figures, and in all more than Rs. 5 billion in tax funds is lost by the State.

Sources alleged manufacturers also use substandard raw materials, with reinforcing bars being produced mainly using locally available steel, not the imported steel as required. For the removal of colluviums in the steel, they use machinery powered by sludge, not the more expensive variety powered by electricity.

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