GST TDS on metal scrap
This query is : Resolved
05 August 2025
GST TDS is applicable on purchase of metal scrap on taxable value of more than 250000, In case of Credit note of metal scrap issued by supplier which consequences are applicable for deducting GST TDS ? Is less than 250000 credit note taxable value consider under GST TDS ?
12 August 2025
Basic Rule: TDS under Section 51 (CGST Act)
✅ Applicable If:
The recipient is a government department, PSU, or notified entity under Section 51.
Contract value (not invoice value) exceeds ₹2.5 lakh (excluding GST).
The supplier is registered and supply is taxable.
📌 TDS Rate: 2% (1% CGST + 1% SGST or 2% IGST)
📌 Deducted on: Taxable value (excluding GST)
📦 TDS on Purchase of Metal Scrap
If your purchase contract for metal scrap exceeds ₹2.5 lakh (taxable value), TDS is applicable under GST.
Even if you receive multiple invoices, if contract value exceeds ₹2.5 lakh, TDS applies.
🧾 What Happens When a Credit Note Is Issued?
Scenario:
Supplier issues a credit note (e.g., for quality issues, weight difference, rate difference, etc.)
You’ve already deducted TDS on the original invoice.
✅ Consequences for GST TDS:
TDS Once Deducted Is Not Adjusted Automatically
GST TDS once deducted and paid to the government is not reversible, even if a credit note reduces the value later.
GST law does not provide for adjustment of TDS due to credit note reduction.
Recipient Should Not Recalculate or Adjust TDS
No need to rework TDS based on the credit note.
You do not reduce earlier deducted TDS.
Credit Note Below ₹2.5 lakh?
If the credit note taxable value is less than ₹2.5 lakh, and:
It is not a separate supply, but just a partial reduction of a larger supply already subject to TDS → No separate TDS on credit note.
If it represents a new contract or transaction, it may be tested separately for TDS applicability.
✅ Applicable If:
The recipient is a government department, PSU, or notified entity under Section 51.
Contract value (not invoice value) exceeds ₹2.5 lakh (excluding GST).
The supplier is registered and supply is taxable.
📌 TDS Rate: 2% (1% CGST + 1% SGST or 2% IGST)
📌 Deducted on: Taxable value (excluding GST)
📦 TDS on Purchase of Metal Scrap
If your purchase contract for metal scrap exceeds ₹2.5 lakh (taxable value), TDS is applicable under GST.
Even if you receive multiple invoices, if contract value exceeds ₹2.5 lakh, TDS applies.
🧾 What Happens When a Credit Note Is Issued?
Scenario:
Supplier issues a credit note (e.g., for quality issues, weight difference, rate difference, etc.)
You’ve already deducted TDS on the original invoice.
✅ Consequences for GST TDS:
TDS Once Deducted Is Not Adjusted Automatically
GST TDS once deducted and paid to the government is not reversible, even if a credit note reduces the value later.
GST law does not provide for adjustment of TDS due to credit note reduction.
Recipient Should Not Recalculate or Adjust TDS
No need to rework TDS based on the credit note.
You do not reduce earlier deducted TDS.
Credit Note Below ₹2.5 lakh?
If the credit note taxable value is less than ₹2.5 lakh, and:
It is not a separate supply, but just a partial reduction of a larger supply already subject to TDS → No separate TDS on credit note.
If it represents a new contract or transaction, it may be tested separately for TDS applicability.
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