By the Scrap Bhai team · Updated 13 November 2026
Quick answer
Metal Scrap (iron and steel 7204, copper and brass 7404, aluminium 7602, lead 7802) and plastic Scrap (3915) carry 18% GST, and paper Scrap (4707) carries 5%. Since 10 October 2024 a registered buyer of metal Scrap from an unregistered seller pays the GST under reverse charge, and deals between registered parties above ₹2.5 lakh carry a 2% GST TDS.
GST rates and HSN codes for Scrap
GST rates were reorganised from 22 September 2025. Metal and plastic Scrap stayed at 18%, and paper Scrap came down from 12% to 5%. Use the HSN code on every invoice.
| Scrap | HSN code | GST rate |
|---|---|---|
| Iron and steel Scrap (HMS, CI, turnings, stainless steel) | 7204 | 18% |
| Copper Scrap, including brass | 7404 | 18% |
| Aluminium Scrap | 7602 | 18% |
| Lead Scrap | 7802 | 18% |
| Plastic Scrap | 3915 | 18% |
| Paper and cardboard Scrap (gatta, newspaper) | 4707 | 5% |
| Rubber Scrap (other than hard rubber) | 4004 | 5% |
E-waste and mixed lots can fall under different entries depending on what they contain, so ask your CA for the exact code before you bill them.
Reverse charge on metal Scrap
From 10 October 2024, metal Scrap from Chapters 72 to 81 of the tariff (iron, steel, copper, aluminium, lead, zinc and other base metals) works on the reverse charge mechanism (RCM) when a registered buyer buys from an unregistered seller.
- The buyer pays the GST to the government instead of the seller.
- The buyer issues a self-invoice and can claim the GST paid as input tax credit.
- If the seller is registered, normal GST applies: the seller charges GST on the invoice.
For a godown buying from many small kabadiwalas, this means keeping a clear record of every unregistered purchase and paying the tax on it.
2% GST TDS on metal Scrap
Also from 10 October 2024, when a registered person buys metal Scrap from another registered person and the value of supply under the contract is more than ₹2.5 lakh, the buyer deducts 2% of the taxable value as GST TDS (1% CGST + 1% SGST, or 2% IGST for inter-state).
- The buyer deposits the TDS and files the GST TDS return.
- The seller sees the credit in the GST portal and can use it from the electronic cash ledger.
- Plan your cash flow for it: you receive 2% less in hand on such deals until you use the credit.
E-way bills
Moving Scrap by vehicle generally needs an e-way bill when the consignment value is more than ₹50,000. Some states set a different limit for movement within the state. Keep the invoice and e-way bill with the driver; Scrap vehicles are checked often.
Input tax credit
A registered Scrap trader can set off the GST paid on purchases, including GST paid under reverse charge, against the GST collected on sales. Credit is available only when the seller has filed their returns and the invoice shows in your GST portal, so buy from sellers who file on time, and check every GSTIN on the GST portal before a big deal.
TCS under income tax
Separate from GST, income tax rules have required the seller of Scrap to collect tax at source (TCS), at 1% under the earlier section 206C, from the buyer. The new Income-tax Act applies from 1 April 2026, so check the current rate and conditions with your CA and show TCS correctly on your bills.
Clean billing checklist
- Your GSTIN, the buyer’s GSTIN and the correct HSN code on every invoice.
- Weight, rate, tax and the vehicle number, with a weight slip attached.
- Self-invoices for every reverse-charge purchase from unregistered sellers.
- An e-way bill when the value crosses the limit.
- Monthly reconciliation of TDS credit and input tax credit.
- Payments through the bank, not in large cash amounts.
Not registered yet? Start with Scrap business licence and registration.
Start your Scrap business with Scrap Bhai
The Scrap Bhai Scrap Business Course guides you through all of this, step by step, in short Hindi lessons: material identification, rates, buying, selling, fraud safety and a weekly live doubt session. For rates, training and a network together, see the Scrap Business Franchise.
Common questions
What is the GST rate on Scrap?
Most metal Scrap (iron and steel, copper, brass, aluminium, lead) and plastic Scrap carry 18% GST. Paper and cardboard Scrap carry 5% from 22 September 2025, down from 12%. Always check the HSN code of the exact material.
What is the HSN code for iron Scrap?
Iron and steel Scrap, including stainless steel Scrap, falls under HSN 7204, at 18% GST.
Who pays GST under reverse charge on metal Scrap?
Since 10 October 2024, when a registered buyer buys metal Scrap from an unregistered seller, the buyer pays the GST under the reverse charge mechanism and can claim it as input tax credit.
What is the 2% TDS on metal Scrap?
When a registered person buys metal Scrap from another registered person and the value under the contract is more than ₹2.5 lakh, the buyer deducts 2% of the taxable value as GST TDS and deposits it. The seller gets credit for it in the GST cash ledger.
Is an e-way bill needed to move Scrap?
Generally yes, when the value of the consignment is more than ₹50,000. Some states set different limits for movement within the state, so check your state’s rule.
This guide is general information, not legal, tax or investment advice. Rules and rates change, so confirm the details with a CA or your local office before you act.