Summary: Following the 54th GST Council Meeting on September 9, 2024, new notifications regarding the GST compliance on metal scrap purchases have been issued, effective from October 10, 2024. Buyers who are registered for GST and purchase metal scrap from unregistered sellers must pay GST at a rate of 18% under the Reverse Charge Mechanism (RCM). Conversely, if a buyer purchases metal scrap from a registered seller, they are required to deduct GST TDS if the contract value exceeds ₹2,50,000 (excluding GST). The TDS rates are 2% IGST for inter-state purchases and 1% CGST plus 1% SGST for intra-state transactions. To deduct GST TDS, the buyer must obtain a new GST registration as a tax deductor in addition to their existing regular GST registration, enabling them to pay and file returns for the deducted GST TDS. The compliance applies to metal scrap items categorized under various Customs Tariff Chapters, including Iron and Steel (Chapter 72), Copper (Chapter 74), Aluminum (Chapter 76), and others.
Buyers (for taking action) and Sellers (for information to know):
On the recommendation of 54th GST Council Meeting held on 9th Sep’2024, following notifications issued notifications pertains to the following:
(1) 06/2024-Central Tax (Rate) w.e.f. 10th October 2024, If Buyer / Purchaser is Registered with GST / Having GST Number and purchasing Metal Scrap (as list below) from Un Registered Person (not having GST Number), then Buyer/Purchaser needs to pay GST @18% under RCM.
(2) 25/2024-Central Tax w.e.f. 10th October 2024, If Buyer / Purchaser is Registered with GST and Having GST Number and purchasing Metal Scrap (as list below) from Registered Person (having GST Number), then Buyer/Purchaser needs to needs to deduct GST TDS if transactions / Contract Value exceeds Rs. 2,50,000/-(Excluding GST)
IGST TDS @ 2% in case of Inter State purchases (from different State)
CGST TDS @ 1% and SGST TDS @1% in case of instar state purchases (within State)
Note: to deduct above GST TDS, Registered Buyer / Purchaser needs to take new GST Registration as Tax Deductor in addition to present/existing GST Regular Registration, then only he is able to pay deducted GST TDS and file related returns(GSTR-7).
The provisions apply to metal scrap items covered under the following Customs
Tariff Chapters:
Chapter 72: Iron and Steel
Chapter 73: Articles of Iron or Steel
Chapter 74: Copper and Articles Thereof
Chapter 75: Nickel and Articles Thereof
Chapter 76: Aluminum and Articles Thereof
Chapter 77: Reserved for 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, Cermets, Articles Thereof
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