New GST for Scrap Material and Waste Products

Scrap trading is a crucial part of the Indian economy. Whether it’s metal waste, old machinery, or paper scrap, recycling industries rely heavily on scrap dealers and suppliers. With  GST  in place, knowing the gst for scrap helps businesses price correctly and stay compliant with tax rules.

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New GST Rate on Scrap Materials

The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for common scrap categories (no compensation cess).

Where a category previously had 12% (e.g., certain paper waste), it is generally expected to move to 5%; others remain at 18% unless notified.

HSN Code and New GST Rate on Scrap Materials

Type of Scrap HSN Code New GST Rate
Iron and steel scrap 7204 18%
Aluminium scrap 7602 18%
Copper scrap 7404 18%
Brass scrap 7402 18%
Paper waste/scrap 4707 5%
Plastic scrap 3915 18%
Rubber scrap (worn tyres) 4004 18%
E-waste (under specific rules) 84/85/90 5% (conditions apply)

Note: Paper waste (4707) reflects the 12% → 5% move; most metal/plastic/rubber scrap categories remain at 18%. E-waste stays at 5% subject to notified conditions.

What Is Scrap Under GST?

Scrap refers to waste or discarded material generated during the manufacturing or production process, or after the useful life of a product.

  • Iron and steel scrap
  • Aluminium scrap
  • Plastic or rubber scrap
  • Paper and cardboard scrap
  • Electronic waste

These materials are bought and sold in large volumes and attract specific GST rates based on their type.

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GST on Scrap: General Rule

The general gst on scrap is 18%, unless a different rate is notified for a specific type. The tax is applicable whether:

  • The scrap is sold by a manufacturer, trader, or recycler
  • It is supplied to another registered business
  • It is part of a business inventory clearance

Old GST Rate on Scrap Materials

(Old GST Rates – Applicable Until 21st September)

Type of Scrap HSN Code GST Rate
Iron and steel scrap 7204 18%
Aluminium scrap 7602 18%
Copper scrap 7404 18%
Brass scrap 7402 18%
Paper waste/scrap 4707 12%
Plastic scrap 3915 18%
Rubber scrap (worn tyres) 4004 18%
E-waste (under specific rules) 84/85/90 5% (conditions apply)

Iron Scrap GST Rate

Iron and steel are the most commonly traded scrap materials. The iron scrap gst rate is:

  • 18% under iron scrap HSN Code 7204
  • This rate applies to demolished structures, returned machinery, manufacturing waste, or old vehicle shells

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GST on Scrap Sales: Who Must Pay?

Any GST-registered business that sells scrap material must:

  • Issue a tax invoice with HSN code
  • Charge GST on the sale
  • Report it in GSTR-1 and GSTR-3B
  • Pay collected tax to the government

Even job workers or contractors generating scrap during production must follow the same rule.

GST Rate on Scrap Sales: ITC Eligibility

Buyers of scrap (like recyclers or manufacturers) can  claim Input Tax Credit  on GST paid during scrap purchases, provided:

  • They’re GST-registered
  • The purchase is for business use
  • They have a valid invoice and HSN classification

So, GST becomes a flow-through tax for B2B scrap deals.

Susheel Kumar
Susheel Kumar
Chartered Accountant
MRN No.: 096252
City: Delhi

I am a Chartered Accountant with over 20 years of experience and a finance content writer. I focus on educating people about finance and taxation. I have written many blog posts on finance, taxation, trading, and investment on the BUSY website. My goal is to increase financial understanding by making complex concepts easier to grasp and to support educational programs in India.

Frequently Asked Questions

  • What is the GST on scrap in general?
    Most scrap materials, especially metals, are taxed at 18% GST.
  • What is the GST on metal scrap like iron and steel?
    The GST on metal scrap, including iron scrap GST rate, is 18%, under HSN Code 7204.
  • Are all scrap sales taxed under GST?
    Yes, if sold by a registered business. Exemptions apply only in very specific government-notified cases.
  • Is Input Tax Credit available on scrap purchases?
    Yes. Registered buyers can claim ITC if conditions are met.
  • What is the GST rate on scrap sales of paper waste?
    Paper scrap is taxed at a reduced rate of 12%, under HSN Code 4707.
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