Vat tax on scrap from construction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 December 2012 Dear All,

Whether the VAT Tax payable on steel scrap sales and What is the rate of tax payable on sale of scrap, which generated during the construction.

Ours is power plant, we are not paying any sales tax on power sales, But we want to sell the scrap generated during construction of power plant.

Please help us.
Swamy Kar

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2013 dear experts,

please answer my query.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 Regarding VAT on steel scrap generated during construction (like in your power plant case), here’s the general guidance:
VAT on Sale of Scrap (Steel Scrap from Construction)
VAT Applicability:
Scrap generated from construction activities is liable for VAT as it is considered a sale of goods.
Power sales may be exempt from sales tax/VAT, but scrap is treated as a separate product and taxable.
Tax Rate on Scrap:
The VAT rate on scrap (like steel scrap) typically varies by state.
In many states, VAT on scrap steel is levied at a concessional or lower rate, often between 5% to 12.5%.
For example, Maharashtra and Gujarat have had VAT rates around 5-12.5% on scrap.
Documentation:
Proper invoices and accounting of scrap sales must be maintained.
Input tax credit cannot be claimed on scrap sales.
Advice:
Confirm the exact VAT rate applicable in your state (since rates vary).
Register for VAT if required, and file returns disclosing scrap sales separately.

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