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The term "Scrap" has not been defined any where in the GST Laws. As such one can derive its meaning as per normal business or commerce parlance. As per business dictionary "scrap" means "w aste that either has no economic value or only the value of its basic material content recoverable through recycling". In GST regime, in order to be taxable, the waste and scrap don't have to pass the test of "manufacture" or "mechanical process" or "marketability".  

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 on Sale of Scrap materials

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.  

 

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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