The highest rate of GST for scraps material is 18%
Meaning of scrap
As per business dictionary "scrap" means "waste that either has no economic value or only the value of its basic material content recoverable through recycling".
What is Metal Scrap?
Metal scrap means scrap of item covered under -
| Chapter 72 | Iron and steel |
| Chapter 73 | Articles made of iron or steel |
| Chapter 74 | Copper and articles thereof |
| Chapter 75 | Nickel and articles thereof |
| Chapter 76 | Aluminium and articles thereof |
| Chapter 77 | Reserve for possible future use |
| Chapter 78 | Lead and articles thereof |
| Chapter 79 | Zinc and articles thereof |
| Chapter 80 | Tin and articles thereof |
| Chapter 81 | Other base metals, cermet's and articles thereof |
Is scrap taxable under GST?
Scrap is a taxable supply under GST. The rate of GST on scrap depends upon nature of Scrap & its HSN Code. For the purpose of determination of value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 shall not be includible. TCS U/s 206(C)(1) of income Tax Act, 1961 should be collected on value inclusive of GST.
While taxability of waste and scrap is no longer contentious, finding proper HSN code is definitely a tedious task. The highest rate of GST for scraps material is 18%.
GST Rate Chart Of Scrap Materials
|
HSN Code |
Description |
GST Rate |
|
3915 |
Plastic waste, parings or scrap |
5% |
|
4004 |
Rubber waste, parings or scrap |
5% |
|
4017 00 20 |
Hard Rubber waste or scrap |
5% |
|
4401 |
Wood Scrap |
5% |
|
4415 |
Packing cases, Box, Crates, Drums |
5% |
|
4707 |
Paper waste or scrap |
5% |
|
7001 |
Cullet or other waste or scrap of Glass |
5% |
|
2524 |
Asbestos waste |
5% |
|
7112 |
Waste and scrap of precious metal |
3% |
|
3006 |
Pharmaceutical Waste (except Contraceptives) |
12% |
|
3825 |
Municipal waste, sewage sludge, clinical waste |
0% |
|
2621 |
Slag & Ash Waste |
18% |
|
7204 |
Vehicle Scrap |
18% |
|
7204 |
MS Scrap of all types |
18% |
|
7204 |
Scrap US Rail |
18% |
|
7404 |
Copper Waste & Scrap |
18% |
|
7408 |
Bronze Waste & Scrap |
18% |
|
7503 |
Nickel Waste & Scrap |
18% |
|
7602 |
Aluminium Waste & Scrap |
18% |
|
7902 |
Zinc Waste & Scrap |
18% |
|
8002 |
Tin Waste & Scrap |
18% |
|
8113 |
Cermets and articles thereof waste and scrap |
18% |
|
85 |
E-Waste |
5% |
|
8548 |
Waste and scrap of primary Cells primary batteries and electric accumulators |
18% |
Note
a) e-waste means electrical and electronic equipment listed in Schedule I of the E-Waste (Management) Rules, 2016, published in the Gazette of India vide G.S.R. 338 (E) dated the 23rd March, 2016, including the components, consumables, parts and spares which make these products operational.
b) The HSN code for a large number of Scraps materials has till now not yet been notified. As a conservative approach , if some one does not find appropriate HSN code of a scrap item, he may cover the same under residual Entry 453 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017.
Applicability of GST and TDS on sale of Metal Scrap
| Supplier | Recipient | GST Applicable | TDS Applicable |
| Unregistered | Unregistered Buyer | Exempted | NA |
| Unregistered | Unregistered Buyer | 18% applicable under RCM | NA |
| Registered | Unregistered Buyer | 18% applicable under FCM | NA |
| Registered | Unregistered Buyer | 18% applicable under FCM | Applicable |
The author is a Fellow member of The Institute of Chartered Accountants of India, New Delhi & Fellow member of The Institute of Cost Accountants of India, Kolkata. He is author of Amazon best seller books on GST, titled "Students' Guide to GST" published by Mewar University Press. He can be reached at gstresolve@gmail.com
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