GST on Scrap Metal in India: Rates, RCM and the Paperwork That Matters
Ferrous scrap sits at 18% under HSN 7204, dolomite at 5%. What changes for unregistered purchases, e-way bills and input credit — explained without jargon.
Where the common grades sit
Ferrous scrap under HSN 7204 — HMS 1, HMS 2, turnings, shredded and cast iron scrap — attracts 18% GST. Semi-finished and finished steel such as billets (7207) and TMT bars (7214) are also at 18%. Dolomite (2518) is taxed at 5%. Rates are indicative of the current schedule and should be confirmed with your tax advisor for each dispatch.
Unregistered purchases (URP)
A large share of collection-level supply comes from unregistered vendors. Buying from a URP source shifts the compliance burden onto the buyer and complicates input credit. The clean alternative is to transact with GST-verified counterparties whose GSTIN status is checked at onboarding — which is why every seller on LohaLink is validated before listing.
The documents an audit will ask for
Keep the following for every consignment, digitally and in one place.
- Tax invoice with correct HSN and place of supply
- E-way bill for consignments above the state threshold
- Weighbridge slips at dispatch and delivery
- Transporter details, vehicle number and delivery acknowledgement
Protecting input tax credit
Credit is denied most often for mundane reasons: a mismatched GSTIN, an invoice raised in the wrong state, or a supplier who never filed. Verifying the counterparty before dispatch and generating the invoice from platform-held trade data eliminates almost all of these failures.