Metal scrap brought under RCM GST-CGST Rate Notification dated 08.10.2024!

In a significant development for businesses involved in the metal scrap industry, the Government of India has brought metal scrap under the Reverse Charge Mechanism (RCM) under the Goods and Services Tax (GST) regime. This move formalized through the CGST Rate Notification dated 8th October 2024, aims to streamline tax compliance and increase efficiency within this sector. The inclusion of metal scrap under RCM means that the liability to pay GST will shift from the seller to the buyer, a shift that can have wide-reaching implications for both vendors and purchasers. 

Let’s understand the changes.

Notification No. 06/2024 - Central Tax (Rate) dated 08th October, 2024

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MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

Date: 08.10.2024

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Notification No. 06/2024 - Central Tax (Rate)

G.S.R. 614(E).- In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 4/2017- Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R. 676(E), dated the 28th June, 2017, namely:-

In the said notification, in the Table, after S. No. 7 and the entries relating thereto, the following S. No. and entries shall be inserted, namely: -

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2. This notification shall come into force on the 10th day of October, 2024.

[F. No. CBIC-190354/149/2024-TO(TRU-II)]

AMREETA TITUS, Dy. Secy.

Note: - The principal notification No. 4/2017-Central Tax (Rate) was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 676(E), dated the 28th June, 2017 and was last amended by notification No. 19/2023-Central Tax (Rate), dated the 19th October 2023, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 780(E), dated the 19th October 2023.

Key Highlights of the Notification

1. Inclusion of Metal Scrap under RCM: The new notification brings metal scrap under the Reverse Charge Mechanism (RCM) under GST. 
2. Effective Date: The provisions of this notification will come into force on 10th October 2024.
3. New Table Entry in GST Notification: The amendment inserts a new entry in the table under S. No. 8 of the GST notification, specifically for metal scrap under the HSN codes 72, 73, 74, 75, 76, 77, 78, 79, 80, or 81.
4. Liability Shift to Registered Buyers: According to this change, unregistered suppliers of metal scrap will now have their GST liability shifted to registered buyers, in line with the RCM framework.

Conclusion

The recent amendment introduced by the Ministry of Finance through CGST Rate Notification No. 06/2024 brings significant changes to the way GST is applied to metal scrap transactions. By placing metal scrap under the Reverse Charge Mechanism (RCM), the responsibility for paying GST shifts from unregistered suppliers to registered buyers, effective from 10th October 2024. This move is designed to enhance compliance, reduce tax evasion, and streamline tax administration within the metal scrap sector.

For businesses involved in scrap trading, recycling, and manufacturing, this change requires a prompt update to accounting practices and a thorough understanding of the revised GST filings. Although the new rules may increase the compliance burden, they also offer an opportunity for greater efficiency and transparency in the sector.

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