HSN Code and GST Rate on Sale of Scrap Materials

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 -

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

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

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