GST on Scrap: Rates, HSN Codes & RCM Rules (2025)
Metal scrap (iron, steel, copper, aluminium) attracts 18% GST under HSN 7204/7404/7503. Plastic scrap and e-waste are taxed at 5%, paper scrap at 12%, and glass cullet at 5%. If the scrap seller is unregistered, the registered buyer must pay GST under Reverse Charge Mechanism (RCM).
18%
GST rate on metal scrap — the most commonly traded scrap category in India, including iron, steel, copper, and aluminium scrap under HSN 7204, 7404, and 7503.
GST Rates on Scrap by Type
| Scrap Type | HSN Code | GST Rate | RCM Applicable |
|---|---|---|---|
| Iron & Steel scrap | 7204 | 18% | Yes (if seller unregistered) |
| Copper scrap | 7404 | 18% | Yes (if seller unregistered) |
| Aluminium scrap | 7503 / 7602 | 18% | Yes (if seller unregistered) |
| Zinc scrap | 7902 | 18% | Yes (if seller unregistered) |
| Lead scrap | 7802 | 18% | Yes (if seller unregistered) |
| Plastic scrap | 3915 | 5% | Yes (if seller unregistered) |
| Rubber scrap / waste | 4004 | 5% | Yes (if seller unregistered) |
| Glass cullet / scrap | 7001 | 5% | Yes (if seller unregistered) |
| E-waste (electronic scrap) | 8549 | 5% | Yes (if seller unregistered) |
| Paper & cardboard scrap | 4707 | 12% | Yes (if seller unregistered) |
| Textile / fabric waste | 6310 | 5% | Yes (if seller unregistered) |
| Used motor oil / lubricants | 2710 | 18% | Yes (if seller unregistered) |
Reverse Charge Mechanism (RCM) on Scrap
Under Section 9(4) of the CGST Act, when a GST-registered business purchases scrap from an unregistered supplier, the buyer must pay GST under RCM. This means the buyer self-invoices the purchase, pays GST to the government, and can claim ITC on the same in the same month.
| Scenario | Who Pays GST? | Invoice Type |
|---|---|---|
| Registered seller → Registered buyer | Seller collects & deposits | Normal tax invoice |
| Unregistered seller → Registered buyer | Buyer pays under RCM | Self-invoice by buyer |
| Unregistered seller → Unregistered buyer | Not applicable | — |
| Export of scrap | Zero-rated (0% GST) | Export invoice with LUT/bond |
Budget 2024: TDS on Scrap Purchases (Section 194Q)
From Budget 2024, TDS under Section 194Q applies to purchases of scrap from manufacturers if the total purchase value exceeds ₹50 lakh in a financial year. The TDS rate is 0.1% of the purchase value. This is in addition to GST and is an income tax provision, not GST. Buyers must deduct and deposit TDS while making payment.
Frequently Asked Questions
What is the GST rate on metal scrap like iron, steel, and copper?
Metal scrap including iron and steel scrap (HSN 7204), copper scrap (HSN 7404), and aluminium scrap (HSN 7503) attracts 18% GST. This applies whether the scrap is sold by a manufacturer, trader, or recycler, and RCM applies if the seller is unregistered.
When does Reverse Charge Mechanism (RCM) apply on scrap purchases?
RCM on scrap applies when the supplier (scrap dealer or seller) is an unregistered person under GST. In such cases, the registered buyer is liable to pay GST directly to the government under Section 9(4) of the CGST Act, instead of the seller collecting and remitting it.
Can I claim ITC on GST paid on scrap purchases?
Yes. A GST-registered buyer who purchases scrap for use in business can claim Input Tax Credit (ITC) on the GST paid, including GST paid under RCM. However, ITC is not available if the scrap is used for exempt supplies or personal purposes.
What is the GST rate on e-waste or electronic scrap?
E-waste (electronic scrap such as old computers, mobile phones, and circuit boards) is taxed at 5% GST. This was reduced from 18% to encourage proper recycling and disposal of electronic waste in India.
Is GST applicable on recycled goods manufactured from scrap?
Yes. Recycled goods manufactured from scrap are taxable at the applicable GST rate for the finished product. For example, recycled steel bars attract 18% GST, the same as fresh steel. The GST rate is determined by the HSN code of the output product, not the input scrap.