An overview of the TDS and RCM on Metal Scrap Transactions
Effective October 10, 2024, the GST Council has introduced significant changes impacting the metal scrap industry. These provisions aim to enhance tax compliance and streamline transactions involving metal scrap. Here’s what you need to know:
TDS on Metal Scrap Transactions:
1. Applicability:
TDS applies when a registered recipient purchases metal scrap (under Chapters 72 to 81 of the Customs Tariff Act, 1975) from registered suppliers.
2. Threshold:
TDS is applicable on contracts where the taxable value exceeds ₹2,50,000 (excluding GST).
3. Rate:
Intra-state: 1% CGST + 1% SGST.
Inter-state: 2% IGST.
4. Compliance Requirements:
Obtain GST registration using Form GST REG-07.
File Form GSTR-7 monthly by the 10th of the following month.
Issue Form GSTR-7A TDS certificates to suppliers.
📌 RCM on Purchases from Unregistered Suppliers:
1. Applicability:
If a registered person purchases metal scrap from an unregistered supplier, the recipient must pay GST under the Reverse Charge Mechanism (RCM).
2. Compliance Requirements:
Generate self-invoices for such purchases.
Pay GST directly to the government and claim Input Tax Credit (ITC), subject to eligibility.
Key Takeaways:
These measures are designed to curb tax evasion and promote transparency in the metal scrap industry.
Businesses must ensure their accounting systems and compliance procedures are updated to align with these changes.