Metal scrap — iron, steel, copper, aluminium, zinc and lead (Chapters 72-81) — is taxed at 18% GST. Most other scrap — plastic, paper, rubber, glass, textile waste and e-waste — is 5% after the GST 2.0 rationalisation of 22 September 2025. If the seller is unregistered, the registered buyer pays under Reverse Charge (RCM). A separate 2% GST TDS applies to metal-scrap purchases from registered suppliers above ₹2.5 lakh.
GST Rate on Scrap by Type — with HSN Codes
The current GST rate and HSN code for every common scrap category traded in India, reflecting the two-slab GST 2.0 structure.
| Scrap Type | HSN | GST Rate | RCM if seller unregistered |
|---|---|---|---|
| Iron & steel scrap | 7204 | 18% | Yes |
| Copper scrap | 7404 | 18% | Yes |
| Aluminium scrap | 7602 | 18% | Yes |
| Zinc scrap | 7902 | 18% | Yes |
| Lead scrap | 7802 | 18% | Yes |
| Plastic scrap / parings | 3915 | 5% | Yes |
| Paper & paperboard waste | 4707 | 5% | Yes |
| Rubber scrap / waste | 4004 | 5% | Yes |
| Glass cullet / scrap | 7001 | 5% | Yes |
| Textile / fabric waste (rags) | 6310 | 5% | Yes |
| E-waste (electronic scrap) | 8549 | 5% | Yes |
| Used mineral / motor oil | 2710 | 18% | Yes |
Paper & paperboard waste (HSN 4707) moved from 12% to 5% under GST 2.0 (56th GST Council, effective 22 September 2025). Always confirm the item’s current rate on the official GST portal before invoicing.
Paper & paperboard scrap (HSN 4707) is now 5% (down from 12%). Plastic, rubber, glass, textile and e-waste scrap all sit in the 5% slab. Metal scrap (Chapters 72-81) remains at 18%. If you are still billing paper waste at 12%, update your masters from 22 September 2025.
Metal Scrap vs Everything Else
For scrap, the rate is decided almost entirely by what the scrap is made of. Metals sit in the 18% slab; most non-metal recyclables sit in the 5% slab.
Non-metal recyclables
- Plastic scrap & parings (HSN 3915)
- Paper & paperboard waste (HSN 4707)
- Rubber, glass cullet & textile waste
- E-waste / electronic scrap (HSN 8549)
- ITC available on business purchases
Metal & oil scrap
- Iron, steel, copper, aluminium, zinc, lead
- Chapters 72 to 81 of the tariff
- Used mineral / motor oil (HSN 2710)
- 2% GST TDS on registered-supplier sales
- ITC available on business purchases
When scrap is recycled into a finished product, tax the output at the product’s own rate and HSN — not the scrap rate. Recycled steel bars are 18% like fresh steel; recycled plastic granules follow their finished-product HSN. The scrap rate applies only to the sale of the waste itself.
Not sure which HSN or rate your scrap falls under?
Get My Scrap GST Rate →RCM & the 2% GST TDS on Scrap
Scrap is bought heavily from small, often unregistered, collectors — so two special rules shift compliance onto the registered buyer. Get these wrong and the tax cost lands on you.
Rule 1 — Reverse Charge (RCM) from unregistered dealers
When a GST-registered business buys metal scrap from an unregistered supplier, the buyer must pay GST under Reverse Charge. The buyer self-invoices, deposits the tax and then claims it back as ITC in the same period.
| Transaction | Who Pays GST | Invoice |
|---|---|---|
| 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%) | Export invoice with LUT / bond |
RCM on metal scrap from unregistered persons was notified via Notification 06/2024-CT(R), effective 10 October 2024.
Rule 2 — 2% GST TDS on metal scrap
From 10 October 2024, a registered buyer of metal scrap (Chapters 72-81) must deduct 2% GST TDS (1% CGST + 1% SGST) when the taxable value of a contract exceeds ₹2.5 lakh and the supplier is registered. Deduct, file GSTR-7 and issue the TDS certificate — this is separate from the income-tax Section 194Q TDS.
GST TDS is 2% under Section 51 on metal scrap over ₹2.5 lakh from registered sellers (GSTR-7). Income-tax TDS under Section 194Q is 0.1% on goods purchases over ₹50 lakh a year. They apply independently and are deposited under different laws.
How GST Adds Up on a Scrap Purchase
18% Metal scrap — ₹1,00,000
5% Plastic / paper scrap — ₹1,00,000
The 2% GST TDS is deducted from the supplier’s payment and deposited by the buyer; it is not an extra cost — the supplier gets credit for it in the electronic cash ledger.
ITC on Scrap Purchases
- A registered buyer using scrap for business can claim Input Tax Credit on the GST paid, including GST paid under RCM.
- ITC on RCM is claimed only after the tax is actually paid in cash via the self-invoice.
- ITC is not available where the scrap feeds an exempt supply or is used for personal / non-business purposes.
- Keep the tax invoice (or self-invoice for RCM), e-way bills and weighbridge slips — scrap ITC is a common audit trigger.
You can claim ITC if
- You are GST-registered and buy scrap for business
- You hold a valid invoice / RCM self-invoice
- The scrap feeds taxable output supplies
- RCM tax (if any) has been paid in cash
ITC is blocked if
- The scrap is used for exempt or nil-rated output
- It is used for personal or non-business purposes
- No valid tax invoice or self-invoice exists
- The supply is not reflected in your GSTR-2B
- Correct HSN & rate classification
- GST registration (GSTIN)
- RCM self-invoice for unregistered buys
- 2% GST TDS & GSTR-7 (metal scrap)
- E-way bill for movement
- GSTR-1 & GSTR-3B filing
- ITC reconciliation via GSTR-2B
- Weighbridge & transport records
Frequently Asked Questions
Related TaxClue services
Trading or Recycling Scrap? Get GST Right
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