GST On Metal Scrap
Ministry of Finance has widened the scope of GST-TDS by bringing metal Scrap into ambit of it.
Goods Covered:
As per the notification issued 25/2024, metal scrap falling under following of Custom Tariff Act, 1975 are covered-
1. Chapter 72: Iron & Steel
2. Chapter 73: Articles of Iron & Steel
3. Chapter 74: Copper and Articles thereof
4. Chapter 75: Nickel and Articles thereof
5. Chapter 76: Aluminum and Articles thereof
6. Chapter 78: Lead & Articles thereof
7. Chapter 79: Zinc & Articles thereof
8. Chapter 80: Tin & Articles thereof
9. Chapter 81: Other Base Metals
Who is responsible to deduct TDS?
As per section 51 of CGST Act-2017, TDS provision is applicable if contract value exceeds 2,50,000/-. Ministry has inserted the clause (d) under said section which says if.
Supplier of Goods- Register Person
Recipient of Goods- Register Person
Liability to deduct TDS- Recipient
How to deduct GST TDS?
To deduct GST TDS buyer of metal scrap, need to take separate registration in form GSTR-7.
Once registration is granted, recipient can discharge TDS Liability by filling TDS return and supplier can take the credit of the same which will get transfer into cash ledger.
What is the rate at which TDS need to be deducted?
CGST: 1%
SGST: 1%
IGST: 2%
Is there any exemption from above provision?
Yes, if supplier is-
1. Department or Establishment of Central or State Government
2. Local Authority
3. Government Agencies
What if purchases are made through Unregistered Person or person not liable to register?
Ministry of Finance wide notification 06/2024 Central Tax (Rate) has brought an amendment to earlier notification 04/2017 Central Tax (Rate). As per the notification if Metal scraps are purchased from unregistered dealer and recipient is register under GST, Liability to discharge GST falls on recipient under Reverse Charge Mechanism. To summarize
1. Supplier: Unregister
2. Recipient: Register
3. Person Liable to Pay: Recipient
Author Note
1. As per the notification issued if the supplier is register under GST, then TDS is applicable. Just because recipient wasn’t aware of supplier’s registration can result into non-compliance on part of recipient. And will result noncompliance cost. To avoid it, following safeguard steps can be taken-
2. Get a declaration from Unregister Supplier stating that they are not register under GST and will inform as and when they get register.
3. Keep a check on Ledger on regular interval, to know whether our purchases from such supplier have been exceeded or likely to get exceed to such limit which warrant them to get register.
4. Keep the record of PAN of such supplier. On regular interval verify whether they have opted of GSTIN (facility available at GST Portal)
The view expressed are personnel. Author may be contacted at cashubhamsawal@gmail.com Mobile: 8888998239
