New GST for Scrap Material and Waste Products
Quick Summary
- The Indian government updated GST rates for scrap materials, effective after September 22, 2025, with most metal, plastic, and rubber scrap remaining at 18% GST.
- Paper waste's GST rate decreased from 12% to 5%, while e-waste is taxed at 5% under specific conditions.
- Scrap refers to waste materials from manufacturing or after a product's useful life, including metals, paper, plastic, and e-waste.
- Businesses selling scrap must issue tax invoices with HSN codes, charge GST, report sales, and pay collected taxes.
- Buyers can claim Input Tax Credit on GST paid for scrap purchases if they are registered and meet specific conditions.
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. In this guide, we will learn about scrap hsn code and gst rate to help businesses price correctly and stay compliant with tax rules.
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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.
New GST Rate on Scrap Materials
The Government of India has rationalised GST rates on several scrap categories as part of the GST updates effective after 22 September 2025. Scrap materials continue to be taxed based on their HSN classification, with most metal and plastic scrap remaining under the 18% GST slab.
One notable revision is for paper waste and scrap, where the GST rate has been reduced from 12% to 5%. Certain categories like e-waste continue to attract 5% GST, subject to specific regulatory conditions.
GST Rates on Scrap Materials in India
| Type of Scrap | HSN Code | New GST Rate (After 22 Sept 2025) |
Old GST Rate (Before 22 Sept 2025) |
|---|---|---|---|
| Iron and steel scrap | 7204 | 18% | 18% |
| Aluminium scrap | 7602 | 18% | 18% |
| Copper scrap | 7404 | 18% | 18% |
| Brass scrap | 7402 | 18% | 18% |
| Paper waste/scrap | 4707 | 5% | 12% |
| Plastic scrap | 3915 | 18% | 18% |
| Rubber scrap (worn tyres) | 4004 | 18% | 18% |
| E-waste (under specific rules) | 84 / 85 / 90 | 5%* | 5%* |
Note*: E-waste GST applies only when the supply follows the notified recycling and compliance conditions.
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
(After 22 Sept 2025) 5%
(Before 22 Sept 2025) 12%
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
(After 22 Sept 2025) 18%
(Before 22 Sept 2025) 18%
(After 22 Sept 2025) 5%*
(Before 22 Sept 2025) 5%*
GST Rules for Scrap Sales in India
Scrap generated during manufacturing, trading, or recycling activities is taxable under GST. In most cases, scrap materials such as metal, plastic, and rubber scrap attract 18% GST. The applicable rate depends on the HSN classification of the scrap material, so businesses must ensure the correct HSN code is mentioned while issuing invoices.
GST applies when scrap is sold as part of manufacturing waste, when it is supplied by registered traders or recyclers, or when businesses dispose of scrap inventory during regular operations or liquidation. Proper classification and invoicing are important to remain compliant with GST regulations.
Iron Scrap GST Rate
Iron and steel scrap are among the most commonly traded scrap materials in India. These fall under HSN Code 7204, and the applicable GST rate is 18%.
This rate typically applies to scrap generated from demolished structures, discarded machinery parts, manufacturing waste, damaged metal components, or old vehicle bodies. Businesses dealing in iron scrap must charge GST at the applicable rate when selling such materials.
GST Compliance for Scrap Sellers
Any GST-registered business selling scrap materials must follow standard GST compliance requirements. This includes issuing a tax invoice mentioning the correct HSN code, charging GST on the sale, and reporting the transaction in GST returns such as GSTR-1 and GSTR-3B.
The collected GST must then be deposited with the government within the prescribed timelines. This rule applies not only to manufacturers and traders but also to job workers or contractors who generate scrap during production or processing activities.
Input Tax Credit on Scrap Purchases
Businesses that purchase scrap materials for further processing or recycling can claim Input Tax Credit (ITC) on the GST paid during the purchase. This helps reduce the overall tax burden in B2B transactions.
To claim ITC on scrap purchases, the buyer must be registered under GST, the scrap must be purchased for business purposes, and the supplier must provide a valid tax invoice with the correct HSN classification.
Because of this mechanism, GST on scrap often functions as a pass-through tax in business-to-business transactions, where the tax paid at purchase can be offset against the tax payable on future sales.
