Aluminium Scrap HSN Code for GST Filing
Aluminium scrap is generated in large quantities by metal fabricators, cable makers, window frame manufacturers, casting units and recycling yards. Traders buy this scrap and supply it to smelters and foundries that convert it back into usable metal.
To use the aluminium scrap HSN code correctly and apply the right GST rate, scrap dealers, recyclers and industrial buyers need to understand how aluminium scrap is classified under GST and how the present three slab rate structure of 5%, 18% and 40% works for this material.
Aluminium Scrap HSN Code Classification and GST Rates
Here are some commonly used HSN codes and GST rates for this category
| Section | |
|---|---|
| Section No | 15 |
| Section Title | Guide to HSN Section 15 |
| Section Description | BASE METAL & ARTICLES OF BASE METAL |
| Chapter | |
|---|---|
| Chapter No | 76 |
| Chapter Title | Aluminium & Similar Articles |
| Chapter Description | Aluminium and articles thereof |
4 Digit HSN Code Classification
| HSN Code | HSN Code Title | GST Rate |
|---|---|---|
| 7602 | Aluminium waste & scrap | 18% |
What GST Rate Applies to Aluminium Scrap Under HSN Code
In the current three slab GST system, aluminium scrap in the aluminium waste and scrap family is usually taxed at the standard 18% slab. This reflects its treatment as a regular taxable supply of metal scrap used by smelters, foundries and secondary producers.
The GST rate may vary depending on specific notifications and conditions, for example where there are special schemes for particular sectors. However, for most routine scrap purchases and sales, businesses treat aluminium scrap as attracting 18% GST under the aluminium waste and scrap family.
When setting up items in accounting software, scrap dealers commonly assign the aluminium scrap HSN family to all relevant scrap products and link it with the 18% rate so that invoices and tax reports stay consistent.
Why is Aluminium Scrap HSN Code Important for GST Compliance
Using the correct aluminium scrap HSN code on every invoice helps buyers and sellers clearly see how the material has been classified and why a particular GST rate has been charged. This supports smooth input tax credit for industrial buyers who use aluminium scrap as a raw material.
Correct HSN usage also keeps outward supply data clean in GSTR one and other returns. If scrap is wrongly billed under a different metal family or with a lower rate than required, it can lead to short payment of tax, mismatch with recipient data and possible interest and penalties.
Once the right aluminium scrap HSN code and GST rate are saved in the item master, every sale and purchase entry can follow the same classification. This reduces manual changes and makes reconciliation easier during audits and departmental checks.
How Do Different Types of Aluminium Scrap Get Classified for GST
Different types of aluminium scrap such as turnings, borings, off cuts from sheets, window frame scrap, cable scrap and broken castings can all fall in the same aluminium waste and scrap family when they are collected mainly for metal recovery.
In practice, many businesses create separate stock items for different grades or sources of aluminium scrap but still keep them under the same aluminium scrap HSN family. The difference in grade is then shown in the item description rather than through a change in HSN code.
If aluminium waste is still in the form of a usable product and is being sold as second quality goods rather than scrap, it may need a different HSN family. In such situations, classification should be based on the main description and intended use of the goods rather than only on the word scrap.
Conclusion
Aluminium scrap HSN codes usually place all common grades of metal scrap in a single aluminium waste and scrap family. Under the present three slab GST structure, this family generally attracts 18% and is treated as a standard taxable supply for recycling and metal recovery.
By linking every aluminium scrap item to the correct HSN family, applying the proper GST rate in the item master and using these details on each invoice, scrap dealers and industrial buyers can keep billing accurate, protect input tax credit and stay compliant during GST reviews and audits.
I’m CA Shivani Kandalkar, a Chartered Accountant based in Mumbai with over 1 year of experience. My focus areas are Taxation and GSTR compliance, where I help individuals and businesses file accurate returns and avoid notices. With a background in M.Com and professional training as a Chartered Accountant, I aim to provide clear, practical guidance that simplifies tax laws and supports better financial decisions.
Frequently Asked Questions
-
What is the HSN code for aluminium scrap?
Aluminium scrap is usually classified in the non ferrous metals section in the aluminium waste and scrap family. This family covers aluminium turnings, borings, off cuts and other waste collected mainly for metal recovery.
-
How is the GST rate determined for aluminium scrap?
For normal trade in aluminium scrap, businesses commonly apply the standard 18% slab under the aluminium scrap family. Any change in rate depends on specific government notifications and conditions that apply to scrap supplies.
-
Does the classification of aluminium scrap vary for different grades?
Different grades such as clean scrap, mixed scrap or foundry scrap can be shown as separate items, but they often share the same aluminium scrap HSN family if they are all aluminium waste meant for remelting or recycling.
-
How do I apply the correct HSN code for aluminium scrap in GST returns?
Set the aluminium scrap HSN family and the usual 18% rate in your item master and use these details on every scrap invoice. Your accounting software can then generate HSN wise summaries so that aluminium scrap turnover is reported correctly in GST returns.
-
Are there different HSN codes for scrap based on its processing?
Processing such as cutting or sorting does not always change the HSN family if the material remains aluminium scrap. A different HSN code is normally needed only when the processing converts the scrap into a new finished product.