The Federal Board of Revenue (FBR) has revised the minimum taxable valuation of certain categories of remeltable iron and steel scrap, increasing the prescribed benchmark from 55% to 60% of the reference value of steel bars. The change is expected to increase the minimum value considered for sales tax calculations on qualifying scrap transactions.
The revision was introduced through S.R.O. 2086(I)/2026, dated November 5, 2026, under the authority granted by the first proviso to clause (46) of Section 2 of the Sales Tax Act, 1990.
Which Steel Scrap Transactions Are Covered?
The revised valuation applies to remeltable iron and steel scrap classified under Pakistan Customs Tariff (PCT) heading 72.04.
However, the amendment is limited to specific transactions involving direct supplies from manufacturer-cum-exporters of recycled copper who are authorised under the Export Facilitation Scheme (EFS) to registered steel melters.
Therefore, the revised valuation should be considered in the context of the particular suppliers, buyers and transactions identified in the notification.
Minimum Valuation Increased by Five Percentage Points
Under the previous arrangement, the minimum supply value for the specified scrap category was set at 55% of the benchmark value applicable to steel bars. Following the latest amendment, this percentage has been raised to 60%.
The change replaces the existing 55% figure with 60% against serial number 5 of the relevant valuation table.
For illustration, if the applicable benchmark value of steel bars is Rs200,000 per metric tonne, the minimum taxable value would increase from Rs110,000 to Rs120,000 per metric tonne.
This represents a 9.09% increase in the prescribed minimum valuation, although the change in the benchmark percentage is five percentage points.
How Is the Steel Bar Benchmark Determined?
The reference value used for calculating the minimum supply value is linked to the average retail prices of steel bars published monthly by the Pakistan Bureau of Statistics (PBS).
The relevant prices are collected for six major cities:
- Lahore
- Karachi
- Peshawar
- Quetta
- Rawalpindi
- Islamabad
A deduction of Rs1,500 per metric tonne is applied to the benchmark value before the prescribed percentage is used to calculate the minimum taxable supply value.
With the revised percentage, the minimum value of qualifying scrap supplies will now be calculated at 60% of the adjusted steel bar benchmark.
Background of the Latest Amendment
The revised valuation is part of an existing framework introduced through S.R.O. 2402(I)/2025, dated December 10, 2025. This notification established minimum supply values for locally manufactured steel products for sales tax assessment on an ad valorem basis.
Later, through S.R.O. 1829(I)/2026, dated October 15, 2026, the FBR included the specified category of remeltable iron and steel scrap in the valuation table and prescribed a minimum value of 55% of the steel bar benchmark.
The latest notification, S.R.O. 2086(I)/2026, has now revised that percentage to 60%.
Impact on Sales Tax Calculations
The increase does not represent a change in the statutory sales tax rate. Instead, it modifies the minimum taxable value used to calculate sales tax on the specified supplies.
As a result, businesses involved in the covered transactions may face a higher taxable base, potentially increasing the amount of sales tax payable even though the applicable tax rate remains the same.
Registered steel melters and authorised recycled-copper exporters should review their valuation practices, accounting records and sales tax invoicing procedures to ensure compliance with the revised requirement.
Conclusion
The FBR’s latest amendment raises the minimum valuation of specified remeltable iron and steel scrap from 55% to 60% of the adjusted steel bar benchmark. The measure specifically concerns direct supplies made by authorised recycled-copper exporters to registered steel melters.
Businesses operating within this supply chain should take note of the revised valuation and incorporate the new benchmark into their sales tax calculations to maintain compliance with the applicable provisions of the Sales Tax Act, 1990.