Metal Scrap Under Reverse explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Entry 8 is the newest entry in the goods reverse charge notification, and on its own it looks minor. It is not minor, because it did not arrive alone. Three notifications dated 8 and 9 October 2024 rebuilt the entire tax architecture of the scrap trade — and they were designed to work together.
Entry 8 of Notification No. 4/2017-CT(Rate), inserted by Notification No. 06/2024-CT(Rate) dated 08.10.2024 with effect from 10.10.2024, covers metal scrap falling under Chapters 72, 73, 74, 75, 76, 77, 78, 79, 80 or 81 supplied by any unregistered person to any registered person. Notification No. 24/2024-Central Tax dated 09.10.2024 then withdrew the registration exemption for metal scrap suppliers, so a scrap supplier must register once it crosses the threshold even though the recipient pays. And Notification No. 25/2024-Central Tax dated 09.10.2024 brought registered-to-registered scrap supplies within section 51 TDS at 2% of the taxable value.
Entry 8 itself
| Entry | Chapters | Description | Supplier | Recipient |
|---|---|---|---|---|
| 8 | 72, 73, 74, 75, 76, 77, 78, 79, 80 or 81 | Metal scrap | Any unregistered person | Any registered person |
The chapter list is the ferrous and non-ferrous metals block of the tariff — iron and steel and articles thereof, copper, nickel, aluminium, lead, zinc, tin and other base metals.
The Handbook states the object in two sentences: the change "would shift the responsibility for paying GST from Unregistered Supplier to Registered Buyers effective from 10.10.2024", and "this amendment is made to track down the untapped metal scrap transaction, which have a significant impact in financial statements."
Read the supplier column carefully. Entry 8 catches only the unregistered supplier. A registered scrap dealer selling to a registered buyer is not in Entry 8 — that supply is under forward charge, and is instead caught by the TDS notification described below.
The registration exemption that was taken away
This is the change that most often surprises scrap dealers, because it reverses a rule that had held since 2017.
The general rule. By section 23(2) read with Notification No. 5/2017-Central Tax dated 19.06.2017, a person engaged only in making supplies of goods or services the whole of the tax on which is payable by the recipient under section 9(3) is exempt from obtaining registration. That is why an advocate, an insurance agent or a small GTA whose entire outward supply is under RCM need not register at all, whatever the turnover.
The withdrawal. The Handbook on Government Supplies records that this exemption is not available to metal scrap suppliers, the exemption having been withdrawn vide Notification No. 24/2024-Central Tax dated 09.10.2024:
"earlier if the entire outward supply was liable to tax under RCM, the supplier was not required to register, even if their turnover exceeded the threshold limit. However, this exemption has now been withdrawn for metal scrap suppliers."
So from October 2024, metal scrap suppliers must obtain registration once aggregate turnover crosses the ordinary threshold — the Handbook notes ₹40 lakh for goods in most States, ₹20 lakh or ₹10 lakh in special category States. As it puts it: "This makes it mandatory for all major players in the scrap industry to register under GST, even if they are dealing with registered recipients paying tax under RCM. The aim is to eliminate the practice of remaining unregistered and increase overall tax compliance."
The design is now visible. Entry 8 makes it unattractive to buy from an unregistered supplier; Notification No. 24/2024 makes it impossible for a supplier of size to stay unregistered. Between them, the unregistered scrap supply is squeezed out.
The TDS limb: registered-to-registered supplies
The third notification closes the remaining leg — the supply between two registered persons, which Entry 8 does not touch.
Notification No. 25/2024-Central Tax dated 09.10.2024 inserted a new clause (d) into the section 51 deductor notification, covering:
"Any registered person receiving supplies of metal scrap falling under Chapters 72 to 81 in the First Schedule to the Customs Tariff Act, 1975, from another registered person."
Effect: registered buyers of metal scrap must comply with TDS provisions when receiving such supplies.
The third proviso was replaced to read that nothing in the notification applies to supply between persons specified under clauses (a), (b), (c) and (d) of section 51(1), except the person referred to in clause (d). Volume I spells out both limbs of that:
- Supplies between entities already specified under clauses (a), (b) and (c) — government departments, local authorities, government agencies — remain exempt from TDS.
- But supplies involving metal scrap dealers under clause (d) are explicitly not exempt and continue to attract TDS. So even a government body, when registered and receiving metal scrap from another registered person, must deduct.
The worked example from Volume I:
| Value of metal scrap | ₹3,00,000 |
| GST at 18% | ₹54,000 |
| Total invoice value | ₹3,54,000 |
| TDS at 2% on the taxable value (excluding GST) | ₹6,000 |
| Amount paid to the supplier | ₹3,48,000 |
| Deposited with Government as TDS | ₹6,000 |
Two mechanics to note. TDS is computed on the taxable value excluding GST, not on the invoice value. And the amount deducted is reflected in the electronic cash ledger of the deductee — so it is not a cost to the supplier, only a cash-flow and compliance consequence.
A reporting change followed. Notification No. 09/2025-Central Tax dated 11.02.2025 updated Form GSTR-7 to support invoice-level reporting of TDS, and the GSTN portal has enabled it — improving cross-verification of taxable values declared in returns.
What a buyer's process has to do now
Classify the goods. Chapters 72 to 81 is the boundary. Scrap outside that block — plastic, paper, e-waste that is not classifiable in those chapters — is not within Entry 8 or the TDS clause.
Establish the supplier's registration status, and record it. The status decides which of two entirely different regimes applies: RCM if unregistered, forward charge with 2% TDS if registered. There is no third path.
For the unregistered leg, the ordinary section 9(3) mechanics follow: self-invoice under section 31(3)(f), payment voucher under section 31(3)(g), time of supply under section 12(3) — earliest of the date of receipt of goods, the date of payment entered in the books or debited to the bank account, or the day after thirty days from the supplier's invoice — payment in cash under rule 85(4), and credit in the same period if otherwise eligible.
For the registered leg, register as a deductor, deduct at 2%, and file GSTR-7 with invoice-level detail.
And check the supplier's own obligation. A supplier whose turnover has crossed the threshold can no longer rely on Notification No. 5/2017-Central Tax. A buyer treating a large supplier as unregistered and discharging RCM may be dealing with a person who ought to be registered.
Key takeaways
- Entry 8, w.e.f. 10.10.2024, covers metal scrap of Chapters 72 to 81 from an unregistered supplier to a registered recipient.
- The purpose is to bring an untracked trade into the return system, not merely to move a liability.
- Notification No. 24/2024-Central Tax withdrew the registration exemption for metal scrap suppliers — they must register on crossing the threshold even if the buyer pays under RCM.
- Notification No. 25/2024-Central Tax brought registered-to-registered metal scrap supplies within section 51 TDS at 2% of the taxable value.
- TDS applies even between government entities where the supply is metal scrap under clause (d).
- TDS is computed on the taxable value excluding GST, and lands in the supplier's electronic cash ledger.
- GSTR-7 now supports invoice-level TDS reporting — Notification No. 09/2025-Central Tax dated 11.02.2025.
Read next
- RCM Goods Entries 5 to 7: Lottery, Government Scrap and PSLC
- RCM on Goods, Entries 1 to 4A: Where the Agriculturist Definition Does the Work
- ITC on Reverse Charge Tax: Conditions, Timing and the ISD Route
Disclaimer: Positions stated as on 5 September 2026, based on entry 8 of Notification No. 4/2017-Central Tax (Rate) as inserted by Notification No. 06/2024-Central Tax (Rate) dated 8 October 2024, Notification Nos. 24/2024 and 25/2024-Central Tax dated 9 October 2024, Notification No. 5/2017-Central Tax, section 51 of the CGST Act, 2017 and Notification No. 09/2025-Central Tax dated 11 February 2025, as reproduced in the ICAI Handbook on Reverse Charge under GST (2nd edition, February 2025), the ICAI Handbook on Government Supplies under GST (Including TDS Provisions) and the ICAI Background Material on GST, Volume I.