{"id":861,"date":"2024-11-27T17:30:45","date_gmt":"2024-11-27T12:00:45","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=861"},"modified":"2025-06-26T15:56:39","modified_gmt":"2025-06-26T10:26:39","slug":"tds-on-metal-scrap","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/","title":{"rendered":"TDS on Metal Scrap: Reporting Issues and Resolution"},"content":{"rendered":"\n<p>TDS on Metal Scrap refers means that a businesses must withhold amount while making payments to suppliers for the purchase of metal scrap.<\/p>\n\n\n\n<p><strong>For example<\/strong><\/p>\n\n\n\n<p>When a business buys metal scrap amounting Rs 50,000, it will deduct 2% TDS i,e., Rs 1,000 and pay Rs 49,000 to the supplier. The deducted amount will then to be deposited with the government.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"538\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-on-Metal-Scrap-1024x538.jpg\" alt=\"\" class=\"wp-image-862\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-on-Metal-Scrap-1024x538.jpg 1024w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-on-Metal-Scrap-300x158.jpg 300w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-on-Metal-Scrap-768x403.jpg 768w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-on-Metal-Scrap.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Introduction\" >Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Applicability\" >Applicability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Official_Notification\" >Official Notification<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Explanation\" >Explanation<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Effective_date\" >Effective date<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Separate_registration\" >Separate registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#TDS_Rates\" >TDS Rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Monthly_Updates\" >Monthly Updates<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Key_Points_on_Reporting_TDS_for_Metal_Scrap_Supplies\" >Key Points on Reporting TDS for Metal Scrap Supplies<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Issue_with_October_2024_Return\" >Issue with October 2024 Return<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Resolution\" >Resolution<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Advisory_for_Reporting_TDS_Deducted_by_scrap_Dealers_in_October_2024\" >Advisory for Reporting TDS Deducted by scrap Dealers in October 2024<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#Registration_Process_for_Metal_Scrap_Buyers\" >Registration Process for Metal Scrap Buyers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.caclubindia.com\/guide\/tds-on-metal-scrap\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The introduction of TDS under GST Act has been a significant step towards improved tax collection, reduction in tax evasion, simplifying process and improving tax compliance in India.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"719\" height=\"404\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/Metal-Scrap-means.png\" alt=\"\" class=\"wp-image-900\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/Metal-Scrap-means.png 719w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/Metal-Scrap-means-300x169.png 300w\" sizes=\"auto, (max-width: 719px) 100vw, 719px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability\"><\/span>Applicability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>TDS is applicable on GST payable by a registered person to the government where the total taxable value of goods or services exceeds a specified threshold. <\/p>\n\n\n\n<p>The registered person shall deduct certain amount of the GST and directly remit it to the government.<\/p>\n\n\n\n<p>However, the Input Tax Credit (ITC) can be claimed by the supplier on the TDS deducted by the payer.<\/p>\n\n\n\n<p>Section 51 of the CGST Act, 2017, a department or establishment of the Central Government or State Government or local authority or Governmental agencies or such persons or category of persons as may be notified by the Government are required to deduct tax at the rate of one per cent where the total value of such supply exceeds two lakh and fifty thousand rupees.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Official_Notification\"><\/span>Official Notification<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per <strong><a href=\"https:\/\/www.caclubindia.com\/news\/gstn-issues-advisory-for-taxpayers-new-gst-provision-for-metal-scrap-transactions-23976.asp\">Notification No. 50\/2018<\/a><\/strong> \u2013 Central Tax dated 13th September, 2018-<\/p>\n\n\n\n<p>\u201cthe Central Government hereby appoints the 1st day of October, 2018, as the date on which the provisions of section 51 of the said Act shall come into force with respect to persons specified under clauses (a), (b) and (c) of sub-section (1) of section 51 of the said Act and the persons specified below under clause (d) of sub-section (1) of section 51 of the said Act, namely:-<\/p>\n\n\n\n<p>(a) an authority or a board or any other body, &#8211;<\/p>\n\n\n\n<p>    (i) set up by an Act of Parliament or a State Legislature; or<\/p>\n\n\n\n<p>    (ii) established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;<\/p>\n\n\n\n<p>(b) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);<\/p>\n\n\n\n<p>(c) public sector undertakings.\u201d<\/p>\n\n\n\n<p>A further amendment has been made to the above notification through Notification No. 25\/2024 \u2013 Central Tax dated 09th October, 2024 that another clause shall be inserted after clause (c) of the above said notification as follows-<\/p>\n\n\n\n<p>\u201c(d) any registered person receiving supplies of metal scrap falling under Chapters 72 to 81 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), from other registered person\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Explanation\"><\/span>Explanation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In simple words, Notification No. 25\/2024 &#8211; Central Tax, was introduced to impose TDS under GST for metal scrap transactions in case of Business-to-Business (B2B) transactions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Effective_date\"><\/span>Effective date<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The above notification shall come into force with effect from the 10th day of October, 2024.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Separate_registration\"><\/span>Separate registration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Form REG-07 has been introduced for TDS deduction registration.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Rates\"><\/span>TDS Rates<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Businesses are required to deduct 2% from registered suppliers.<\/p>\n\n\n\n<p><strong>Intra State :<\/strong> CGST \u2013 1% &amp; SGST \u2013 1%<\/p>\n\n\n\n<p><strong>Inter State :<\/strong> IGST 2%<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Monthly_Updates\"><\/span>Monthly Updates<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Form GSTR-7 shall be filed on the 10th of subsequent month and the form contains details such as TDS deducted, amount paid to supplier, GSTIN details and other relevant information.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Points_on_Reporting_TDS_for_Metal_Scrap_Supplies\"><\/span>Key Points on Reporting TDS for Metal Scrap Supplies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issue_with_October_2024_Return\"><\/span>Issue with October 2024 Return<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Taxpayers who applied for GST registration in October 2024 cannot file returns for October due to system limitations.<\/p>\n\n\n\n<p>This issue has occurred because the taxpayers applied for GST registration in October 2024 pursuant to the above notification, their GST registrations were approved only in November 2024. Hence, in the return dropdown the month October 2024 is not visible to such taxpayers.<\/p>\n\n\n\n<p>This is as per the existing GSTN system design where returns for tax period prior to registration month is not enabled for taxpayers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Resolution\"><\/span>Resolution<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Report TDS deducted for 10.10.2024 to 30.11.2024 in GSTR-7 for November 2024.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advisory_for_Reporting_TDS_Deducted_by_scrap_Dealers_in_October_2024\"><\/span>Advisory for Reporting TDS Deducted by scrap Dealers in October 2024<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"402\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-Deducted-by-scrap-Dealers-in-October-2024-1024x402.png\" alt=\"\" class=\"wp-image-1055\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-Deducted-by-scrap-Dealers-in-October-2024-1024x402.png 1024w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-Deducted-by-scrap-Dealers-in-October-2024-300x118.png 300w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-Deducted-by-scrap-Dealers-in-October-2024-768x301.png 768w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/TDS-Deducted-by-scrap-Dealers-in-October-2024.png 1316w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Registration_Process_for_Metal_Scrap_Buyers\"><\/span>Registration Process for Metal Scrap Buyers<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the advisory issued on October 13, 2024, the <strong><a href=\"https:\/\/www.caclubindia.com\/news\/gstn-issues-advisory-for-gst-reg-07-24027.asp\">GST portal has been updated to help metal scrap buyers register using Form GST REG-07<\/a><\/strong>.<\/p>\n\n\n\n<p>Taxpayers in this category must select &#8220;Others&#8221; in Part B of Table 2 under the &#8220;Constitution of Business&#8221; section and then enter &#8220;Metal Scrap Dealers&#8221; in the text box.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"689\" height=\"720\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/metal-scrap-through-form-GST-REG-07.png\" alt=\"\" class=\"wp-image-894\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/metal-scrap-through-form-GST-REG-07.png 689w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/10\/metal-scrap-through-form-GST-REG-07-287x300.png 287w\" sizes=\"auto, (max-width: 689px) 100vw, 689px\" \/><\/figure>\n\n\n\n<p>This step is mandatory for those selecting \u201cOthers\u201d in Table 2.<\/p>\n\n\n\n<p>After this, fill the remaining details and submit the form on the GST portal to complete registration as per Notification No. 25\/2024 &#8211; Central Tax, issued on October 9,  2024.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1729052361209\"><strong class=\"schema-faq-question\">Who needs to deduct TDS on metal scrap?<\/strong> <p class=\"schema-faq-answer\">Businesses which are involved in B2B transactions including the purchase of metal scrap from registered suppliers are required to deduct TDS.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1729052384261\"><strong class=\"schema-faq-question\">Is TDS on metal scrap applicable to unregistered suppliers?<\/strong> <p class=\"schema-faq-answer\">TDS on metal scrap does not apply to unregistered suppliers or individual sellers.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1729052399414\"><strong class=\"schema-faq-question\">How does this rule benefit the government?<\/strong> <p class=\"schema-faq-answer\">The TDS mechanism will help the government to track metal scrap transactions and improve tax compliance.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>TDS on Metal Scrap refers means that a businesses must withhold amount while making payments to suppliers for the purchase [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":862,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center 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