GST on sale of scrap and waste materials

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GST on sale of scrap and waste materials
Introduction Though the sale of scrap or waste
materials is liable to tax but the term Scrap
is nowhere defined under the GST Laws. In such a
situation, we can derive the meaning of scrap
as per the normal business or commerce parlance.
As per the business dictionary, scrap means
waste that either has no economic value or only
the value of its basic material content
recoverable through recycling. In the erstwhile
excise regime, the scrap or waste was subjected
to a test of manufacture or marketability
for their taxability. But after the introduction
of GST Laws, the waste and scrap dont have to
pass the test of manufacture or mechanical
process or marketability. Scrap is a taxable
supply under GST.
Valuation of scrap for GST For the purpose of
determination of the value of supply in respect
of scrap or waste, Tax collected at Source
(TCS) under the provisions of Income Tax
Act, 1961 shall not be
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includible. It means that GST shall be chargeable
on the Basic Invoice Value without considering
TCS. However, while calculating TCS u/s 206(C)(1)
of the Income Tax Act, 1961, TCS shall be
collected on the value inclusive of GST.
GST rates on scrap waste Different types of
scrap or waste emerge in various industries.
Therefore, different HSN codes and rates are
applicable to different types of scrap based on
the nature of scrap. Finding proper HSN code and
GST rates is a complicated task. In this article,
HSN code and GST rates on different types of
scrap waste material are summarized.
GST Rate Chart for Scrap Materials
HSN Code Description of Goods GST Rate as applicable
3915 Plastic waste, parings or scrap 5 (now proposed to be changed to 18) recommendations of th 45 GST Council meeting
4004 Rubber waste, parings, or scrap 5
4017 00 20 Hard Rubber waste or scrap 5
4401 Wood Scrap 5
4415 Packing cases, Box, Crates, Drums 5
4707 Paper waste or scrap 5
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7001 Cullet or other waste or scrap of glass 5
2524 Asbestos Waste 5
7112 Waste and scrap of precious metals 3
3006 Pharmaceuticals waste (except contraceptives) 12
3825 Municipal waste, sewage sludge, clinical waste 0
2621 Slag Ash waste 18
7204 Vehicle Scrap 18
7204 MS Scrap of all types 18
7204 Scrap US rail 18
7405 Copper waste scrap 18
7408 Bronze Waste scrap 18
7503 Nickel Waste scrap 18
7602 Aluminium Waste scrap 18
7902 Zinc Waste scrap 18
8002 Tin Waste Scrap 18
8113 Cermets and articles thereof waste and scrap 18
85 E-waste 5
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8548 Waste scrap of primary cells primary batteries and electric accumulators 18
Note a) e-waste means electrical and electronic
equipment listed in Schedule I of the E-Waste
(Management) Rules, 2016, published in the
Gazette of India vide G.S.R. 338 (E) rd dated the
23 March 2016, including the components,
consumables, parts, and spares which make these
products operational. b) The HSN code for some of
the scrap items has not yet been notified. So, we
can cover these items in the residuary entry 453
of Schedule III of Notification No. 01/2017-
Central Tax (Rate) dated 2 th June 2017. 8 If
you are not register your business under GST and
looking for Online GST Registration you can
reach TaxWinks industry experts and get
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services at affordable cost GST on sale of scrap
or waste by Government Departments In this
respect, we will refer to Circular No.
76/50/2018- GST dated 31st December 2018 which
provides clarification on issues in respect of
the sale of used vehicles, seized and
confiscated goods, old and used goods, waste, and
scrap by Government departments.
Whether the supply of used vehicles, seized and
confiscated goods, old and used goods, waste,
and scrap by Government departments are taxable
under GST? Yes, intra-state and inter-state
supply of used vehicles, seized and confiscated
goods, old and used goods, waste, and scrap made
by the Central Government, State Government,
Union Territory, or local authority is a taxable
supply under GST.
Whether the sale of scrap or waste by Government
departments taxable under the reverse charge
mechanism or not?
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• GST on sale of scrap or waste to a registered
  person
• Vide Notification No. 36/2017- Central Tax (Rate)
  and Notification No. 37/2017- Integrated
• Tax (Rate) both dated 13.10.2017, it has been
  notified that intra-state and inter-state supply
  respectively of used vehicles, seized and
  confiscated goods, old and used goods, waste and
  scrap by the Central Government, State
  Government, Union Territory or a local authority
  to any registered person, would be subject to GST
  on reverse charge basis as per which tax is
  payable by the recipient of such supplies.
• GST on sale of scrap or waste to unregistered
  person
• It should be noted that supply of used vehicles,
  seized and confiscated goods, old and used
  goods, waste, and scrap by the Central
  Government, State Government, Union Territory,
  or a local authority t o an unregistered person
  is also a taxable
• supply under GST.
• In this regard, it is clarified by Circular No.
  76/50/2018- GST that the respective Government
  departments (i.e. Central or State Government,
  Union Territory, or local authority) shall be
  liable to get registered and pay GST on such
  intra-state or inter-state supply of aforesaid
  goods made by them to unregistered person.
• Thus, GST shall be liable to be paid by the
  Government Departments under
• forward charge mechanism.