The GST Council approved a recommendation for 2% tax deduction at source (TDS) on business-to-business supplies of metal scrap when both the supplier and recipient are registered. This is a TDS measure, not a 2% GST rate or a cut in the GST rate. The Council also approved a separate reverse-charge measure for specified metal-scrap supplies from unregistered suppliers to registered recipients.
What is the 2% TDS on scrap?
At its 54th meeting on 9 September 2024, the GST Council approved a recommendation to introduce 2% TDS on a registered person’s supply of metal scrap to another registered person. The Council’s meeting minutes record that decision; the government’s press release on the meeting summarizes it.
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TDS is a deduction from a payment under the applicable tax rules. It is distinct from the GST rate charged on a supply. The 2% announcement should therefore not be read as saying that GST on scrap became 2% or was reduced by two percentage points.
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The decision’s stated scope turns on the registration status of both parties: it concerns a business-to-business supply of metal scrap from a registered supplier to a registered recipient. The minutes separately record a reverse-charge recommendation for a supply from an unregistered supplier to a registered recipient.
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| Supplier | Recipient | Mechanism described in the Council decision |
|---|---|---|
| Registered | Registered | 2% TDS on the described B2B metal-scrap supply |
| Unregistered | Registered | Separate reverse-charge measure for the described metal-scrap supply |
This summary explains the Council’s decision, not every condition for applying either mechanism to a particular transaction.
Does 2% TDS mean GST on scrap is reduced to 2%?
No. The Council discussed proposals to reduce the GST rate on scrap, including a proposal for a 5% rate, but the minutes record that the existing rate was retained in that discussion. The 2% figure refers to the TDS recommendation, not the GST rate.
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Does scrap TDS apply when the seller is unregistered?
The 2% TDS recommendation described in the 2024 decision is for a registered supplier selling to a registered recipient. For metal scrap supplied by an unregistered person to a registered person, the Council approved a separate reverse-charge measure. Do not treat that as the same transaction rule as registered-to-registered TDS.
Did the Council require e-way bills for every scrap supply?
No universal e-way-bill requirement was approved as part of this decision. The minutes say the question of making e-way bills mandatory for all scrap supplies was to be studied further by the Fitment Committee. That direction is not the same as an approved blanket rule.
What should a business verify before applying the measures?
The Council’s announcement and minutes establish the decision and the distinction between the two counterparty situations, but they are not a complete transaction-level compliance guide. Before deducting, paying or reporting tax, a business should check the implementing legal instruments and the rules in force for the relevant transaction.
- Confirm the applicable notification and its commencement date.
- Check the precise covered goods and tariff headings, along with any exclusions.
- Verify thresholds, conditions and exceptions that apply to the transaction.
- Use the implementing rules to confirm who must deduct or pay, the calculation basis, deposit deadline, return reporting and documentation.
These details cannot safely be inferred from the Council announcement alone. For advice on a specific supply, consult the current notification and a qualified Indian tax professional.
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How does the later 2026 announcement relate to the 2024 decision?
A government release posted on 8 October 2026 describes 2% TDS on B2B supplies of specified additional waste and scrap categories, as well as reverse charge for specified supplies from unregistered to registered persons. Those later categories should not be assumed to cover all scrap or folded into the original 2024 metal-scrap decision. Check the release’s precise category descriptions and the operative legal text before deciding whether a product is covered.
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