The recent Notification No. 25/2024-Central Tax, issued on October 9, 2024, has expanded the applicability of GST TDS on metal scrap. Many businesses are now required to deduct 2% GST TDS when purchasing metal scrap from registered suppliers.
What is Metal Scrap?
As per the Customs Tariff Act, 1975, scrap is defined as:
“All metal waste and scrap, and metal goods that are definitely not usable as such due to breakage, cutting up, wear, or other reasons.”
This includes discarded materials from manufacturing processes, dismantled machinery, and demolition waste that can no longer serve their original purpose.
When is GST TDS Applicable?
GST TDS at 2% (1% CGST + 1% SGST or 2% IGST) applies only if:
√ The material being supplied is metal scrap
√ The scrap falls under Chapters 72 to 81 of the Customs Tariff Act
√ The transaction is between two registered persons
If all these conditions are met, GST TDS must be deducted at the time of payment.
HSN Codes for Metal Scrap (Subject to GST TDS)
GST TDS applies to metal scrap falling under the following HSN codes:
♦ Iron & Steel Scrap – HSN 7204
♦ Copper Scrap – HSN 7404
♦ Nickel Scrap – HSN 7503
♦ Aluminum Scrap – HSN 7602
♦ Lead Scrap – HSN 7802
♦ Zinc Scrap – HSN 7902
♦ Tin Scrap – HSN 8002
Metals on Which GST TDS is NOT Applicable
Not all metal transactions are subject to GST TDS. Some materials do not qualify as scrap and are therefore exempt from TDS deductions, including:
♦ Ferro Alloys (Ferro Molybdenum, Ferro Silicon, Silico Magnesium, Ferro Chrome, Manganese, etc.) – These are used as alloying materials, not waste products.
♦ New & Usable Metal Goods – Such as rods, bars, sheets, coils, and fabricated metal structures.
♦ Machinery & Equipment – If still functional or reusable, it does not count as scrap.
♦ Precious Metals (Gold, Silver, Platinum, etc.) – These are not classified under Chapters 72 to 81 for scrap.
Compliance Steps for Businesses
- Verify HSN classification before deducting GST TDS.
- Deduct 2% GST TDS only on applicable metal scrap transactions.
- Deposit TDS and file GSTR-7 to remain compliant.
Final Thoughts
This notification is a crucial update for businesses dealing in metal scrap. Proper classification is essential to ensure compliance and avoid unnecessary deductions. If you’re involved in metal trading, reviewing your GST TDS obligations is now more important than ever!
Author Bio
it is applicable if purchase value exceeds R.2 lakhs