TDS on GST on Metal Scrap

To determine the correct HSN code for your supplier's product, we need to consider the process and resulting product. Your supplier remelts old iron scrap and converts it into steel sheets, which are used as raw materials for your business. HSN Code Classification Given the product is steel sheets made from remelted iron scrap, the HSN code would likely fall under Chapter 72, which deals with iron and steel products. Here are potential HSN codes: - *7204*: Ferrous waste and scrap; remelting scrap ingots of iron or steel. However, this code seems more relevant to scrap rather than finished products like steel sheets. - *7208* to *7212*: These codes cover flat-rolled products of iron or non-alloy steel, which might be more suitable for steel sheets. Specific HSN Code Without more specific details on the steel sheets' dimensions, composition, or further processing, it's challenging to pinpoint the exact HSN code. However, considering the product is a result of remelting and rolling into sheets, some potential codes could be¹ ²: - *7208*: Flat-rolled products of iron or non-alloy steel, of a widtth of 600 mm or more, hot-rolled, not clad, plated or coated. - *7209*: Flat-rolled products of iron or non-alloy steel, of a widtth of 600 mm or more, cold-rolled (cold-reduced), not clad, plated or coated. GST Rate The GST rate for these products would depend on the specific HSN code. For ferrous waste and scrap, the GST rate is 18%. However, for flat-rolled products of iron or steel, the rate might differ. It's recommended to consult with a tax professional or the supplier to determine the exact HSN code and applicable GST rate for the steel sheets.

Two separate obligations apply to metal scrap transactions. Under GST (Notification 25/2024-CT, effective October 10, 2024), registered buyers must deduct 2% GST TDS when purchasing metal scrap from registered suppliers and deposit it via GSTR-7. Under income tax, the seller collects 1% TCS from the buyer under Section 206C(1) on every scrap sale. These are independent: the GST TDS credit flows through GSTR-2B while the income tax TCS credit shows in Form 26AS. The income tax piece is covered in detail in this [Section 206C TCS guide](https://taxgarden.in/blog/tcs-tax-collected-at-source-section-206c-guide-india).