TDS on Metal Scrap under GST: Latest Updates and Practical Example

Introduction

In an effort to streamline tax compliance within the metal scrap industry, the Indian government has introduced new TDS provisions specific to metal scrap transactions under the GST regime. Here’s a breakdown of the TDS requirements and a practical example to illustrate how it works.

Key Provisions of TDS on Metal Scrap under GST

1. Applicability

Scope: TDS provisions apply to metal scrap transactions involving registered buyers and sellers. Metal scraps covered under Chapters 72 to 81 of the Customs Tariff Act, 1975.

Threshold: TDS is required if the taxable value of the transaction exceeds ₹2,50,000.

2. TDS Rate Structure

• Intra-State Transactions: 1% CGST and 1% SGST, totaling 2%.
• Inter-State Transactions: 2% IGST on the transaction value.

3. Registration Requirements

Buyers required to deduct TDS under these provisions must have a separate GST registration specifically for this purpose.

4. Compliance Obligations for Buyers

Monthly TDS Return: Buyers must file Form GSTR-7 by the 10th of the following month in which TDS was deducted.

5. Benefits for Suppliers

Suppliers receive TDS credits in their electronic cash ledger, which can be used to offset future GST liabilities or claimed as a refund.