The manufacturers do not pay the NBT and VAT taxes, but the relevant authorities ignore complaints due to the gratifications they are receiving from the manufacturers.
The fraud relates mainly to reinforcing bars, whose monthly sale is around 45,000 metric tons.
For each ton sold, a two per cent NBT and a 15 pc VAT have to be paid, but the sellers mention a mere 30 pc of the actual sales in their documentations.
The actual sales translate into a required tax payment of more than Rs. 550 per month, but only nearly Rs. 250 m is paid, causing an annual loss of close to Rs. 3.6 billion.
In addition, sales figures of steel cage and L-angles etc. too, are manipulated to deny nearly Rs. 120 million of taxes.
Furthermore, the income tax is calculated according to the manipulated figures, and in all more than Rs. five billion of tax money is lost to the state.
The 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 costly electricity-powered ones.