FBR Digital Invoicing for Scrap Dealers, Kabaria and Ship-Breaking Yards (2026): Why Steel Mills Now Ask for Your Sales Tax Number

This page is for scrap dealers, kabaria and scrap yards in Pakistan. It explains why steel mills now ask suppliers for a sales tax number. It also shows how to bill a scrap sale so FBR accepts it the first time.

The reason sits in one notification, SRO 1245(I)/2026. An SRO is a Statutory Regulatory Order — a government notice that has the force of law. Under it, a steel melter running on local scrap pays Rs 30 sales tax per unit of electricity. The same mill pays only Rs 5 per unit if imported scrap is more than 70% of its eligible scrap buying. That share is counted over the last twelve months. FBR issued the notification on 31 July 2026. It applies from 1 July 2026.

Read that gap again. Rs 30 against Rs 5, on every single unit of electricity. A mill cannot control the world price of scrap, but it can control who it buys from and what paperwork comes with the load. That one number is why an undocumented kabaria has quietly turned into an expensive supplier.

STRN means Sales Tax Registration Number — the sales tax number FBR gives a business, separate from the NTN (National Tax Number). A mill is not asking for it to trouble you. It is asking because the paperwork now decides what the mill itself pays.

Imported scrap is easy for FBR to see. It arrives under customs codes: HS 7204.3000, 7204.4100, 7204.4940 and 7204.4990. Scrap bought from importers under the Export Facilitation Scheme counts too. Local scrap leaves no such paper trail unless the seller issues a proper invoice. So a mill that wants its purchases counted needs documented suppliers.

There is a second reason, and it is bigger. Section 25A of the Sales Tax Act 1990 settles it. Since 1 September 2025, an invoice issued outside FBR's approved digital system is not a valid sales tax invoice. A handwritten bill book, a WhatsApp photo, even a neat computer print — none of it counts. The invoice must be posted to FBR and come back with a number. Without a valid invoice the buyer cannot claim input tax. Input tax is the sales tax a business already paid on its purchases and subtracts from the tax it owes.

FBR's Sales Tax Circular 01 of 2026, dated 11 September 2026, tightened this further. It set a penalty of up to Rs 1 million for failing to integrate with digital invoicing. A second penalty of up to Rs 5 million follows if the failure continues. It also set a 20% penalty on a buyer who does not reverse input tax within 60 days. That applies to invoices from a supplier FBR has flagged. Buyers read this and get careful. Two guides cover both sides of the check: 'FBR Sales Tax Circular 01 of 2026 Explained' and 'How to Check a Supplier Before Claiming Input Tax'.

Most scrap dealers are traders. You buy cuttings, old metal and machine waste, you sort it, you sell it on. For FBR that is an ordinary sale of goods at the standard rate. The buyer's status decides the shape of the invoice. A registered mill is billed as a registered buyer. An unregistered workshop is billed as unregistered, and that is where further tax comes in. Our guide 'Registered vs Unregistered Buyers on FBR Invoices: Registration Type, Further Tax and ATL Checks' explains that split.

Do not borrow the steel sector's own sale types unless you are actually a melter, a re-roller or a ship breaker. Those belong to the people who melt and roll the metal, not to the yard that supplies them. Pick the wrong one and FBR answers with error 0052, which means the HS code you sent does not match the sale type you chose.

The unit of measure catches more scrap invoices than anything else. Scrap is sold by weight, so the unit has to be a weight unit. For steel melting and re-rolling sales FBR requires MT (metric tonnes) and rejects anything else with error 0062. More generally, the unit must be one FBR allows for that HS code, or you get error 0099. Kilograms and MT are the safe pair for metal; truck loads, pheras and 'lot' are not units FBR knows. Our guide 'UoM in FBR Digital Invoicing: Picking the Right Unit of Measurement (2026)' lists how to check the allowed unit for any code.

One more field trips people up. Leave the extra tax box alone unless the rules for your sale type actually ask for a value. A stray figure sitting there brings back error 0091.

Gadani's yards are a separate case. Ship breaking has had its own sales tax procedure for decades. It goes back to the Special Procedures for Ship Breaking Industry Rules of 1997. Those rules treat re-rollable scrap as a fixed share of the ship's LDT. The yard does not weigh every plate.

On the digital invoicing side FBR gives ship breakers a dedicated scenario, SN004. The sale type is written as 'Ship breaking', the HS code in FBR's own example is 7204.1010, and the unit is MT. Re-rollable plate and re-meltable scrap are different goods with different codes, so bill them as separate lines rather than one mixed entry.

Yards that also melt or roll their own output are doing two different things and need two different sale types on two different invoices. 'FBR Digital Invoicing for the Steel Sector: Melters, Re-Rollers, Ship Breakers & Toll Manufacturing' walks through all three steel scenarios. 'Steel Sales Tax on Electricity: Rs 5 vs Rs 30 per Unit' explains the electricity rule from the mill's side.

Step one: if you are not sales tax registered, find out whether you should be. Most yards selling regularly to registered mills are past the point where staying outside the system is cheaper. 'Sales Tax Registration (STRN) in Pakistan: The Step Before FBR Digital Invoicing (2026)' sets out what registration takes.

Step two: write down every grade you actually sell — re-meltable scrap, re-rollable plate, copper, brass, aluminium, batteries, machine cuttings. Set the HS code and the weight unit for each one, once, with your tax adviser. That list is the whole job; everything after it is repetition.

Step three: post one test sale of your main grade before a busy day, not during one. If a field is wrong you want to find out with one load on the weighbridge, not twenty.

Digi Invoice turns this into a one-time setup. Save each grade with its HS code, its unit and its rate, and the right boxes fill themselves on every future bill. You get the IRN, the QR code and a printable invoice back in seconds, which is exactly the document your buyer's accountant is asking for. Create a free account and post your first scrap invoice today.

Kabaria — the local word for a scrap dealer or junk buyer. FBR has no separate category for kabaria; you are taxed as a trader in goods.

Re-meltable scrap — metal fit only for melting down again. Re-rollable scrap is heavier plate that can be rolled into new bars without melting.

LDT (light displacement tonnage) — the weight of a ship's own steel, empty. Ship-breaking tax has long been worked out as a share of this figure.

MT — metric tonne, one thousand kilograms. FBR requires this unit on steel melting and re-rolling invoices.

IRN (Invoice Reference Number) — the unique number FBR returns after your invoice is posted. No IRN means no valid invoice.