GST Rate on Sale of Scrap Materials with HSN Code

Read this informative post to find GST rates for scrap material with HSN Code, including plastic, rubber, wood, and paper waste.

54th GST Council Meeting – A 2% TDS will be deducted when a registered person sells metal scrap to another registered business.

Latest Update

• The GSTN advisory is relevant for any registered person reporting TDS deductions by scrap dealers for October 2024. View more
• The CBDT’s new advisory mandates GST compliance for businesses dealing with metal scrap. The GSTN will soon enable registration through GST REG-07 on the official portal.

1.    What is the Meaning of Scrap?

Scrap is nowhere related to GST Laws. One could only see its meaning as per the normal mode of business. However, as per the dictionary, scrap means the “waste that either has no economic value or only the value of its basic material content recoverable through recycling”.

In terms of the GST regime, the scrap doesn’t have to be tested and passed through the manufacturer or the mechanical process.

The scrap is the supply of tax under GST norms, its rate of GST has depended upon the nature of the scrap and the HSN code.

For determining the value of supply or GST the tax obtained at the source in the provision of income tax 1961, should not be included. TCS U/s 206(C)(1) of the Income Tax Act, 1961 should be managed on value inclusive of GST.

Finding the tedious task is difficult but the taxability of trash and scrap is not controversial. The highest proportion of GST in the scrap materials substance is 18%.

Read Also: GST Impact on Aluminium Scrap Industry in India

Scrap Dealers on Strike Against GST Dept

The GST department has been facing an indefinite strike from the Iron Scrap Traders Association of Mandi Gobindgarh, with aggression to sort out the misunderstanding between the department in relation to the bogus entity.

The association president had said “Traders purchase scrap and other material from firms in the state, outside and abroad. They supply it to furnaces and mills and pay suppliers as per bills received through banks. They also confirm on the GST portal that suppliers have filed GSTR-1 returns.”

The president had also warned that if the GST department does not come up with a solution then there will be a big strike by closing operations.

GST Rate on Scrap Materials with HSN Code

Note:

• e-waste means the electrical and electronic equipment listed which was scheduled In the Gazette of India vide GSR 338 (E) dated 23rd March 2016  which includes the components, consumables, parts and spares that address these products’ operations.
• The HSN code for the huge number of scraps has not been notified yet. Due to the traditional approach, if one doesn’t find the appropriate HSN code of the scrap item then he might cover it in the residual entry 453 of Schedule III of the notification No.1/2017-Central Tax Ratedated 28th June 2017.

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%.