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.
