GST Council proposes RCM on Battery Scrap Procurement
In the 54th meeting of the GST Council, it was decided that the Reverse Charge Mechanism (RCM) will be introduced on the purchase of metal scrap from unregistered vendors. The buyer of scrap will be liable to pay tax under RCM even if the scrap seller is not registered in GST or his business is below the limit of GST registration. The long-awaited demand of the lead recycling industry has been fulfilled.
Arvind Mohan
The buyer will now have to pay GST on the purchase of Lead scrap
The lead recycling industry had demanded a reduction in GST on scrap from the current 18% on a forward charge basis. The All India Small Battery Federation had written several letters to the Finance Minister Smt. Nirmala Sitharaman in this regard and apprised her of this problem of lead recycling industry and also requested her to implement reverse charge mechanism on the purchase of lead scrap. Mr. Naveen of Gravita and Metal Recycling Association of Jaipur was constantly making efforts in this regard. Through the organization, he met Mrs. Nirmala and presented both the problems and solutions of the industry on this issue.
The GST Council constituted a fitment committee to examine the issue. The committee has set up a panel to deliberate on the subject. After studying the request of the concerned business classes and institutions of the panel, the decision was proposed to the Fitment Committee as per the requirements, which was forwarded by the Fitment Committee to the GST Council. The proposal proposed 2% TDS on supply of metal scrap on trade between registered entities and RCM on supply between unregistered persons. This body suggests that if the supplier is not liable to pay GST, the recipient of the scrap goods will have to discharge the GST liability. The GST Council in its 54th meeting accepted all the recommendations of the Fitment Committee.
The 54th GST Council meeting was held in New Delhi under the Chairmanship of Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman. The meeting was attended by the Union Minister of State for Finance, Shri Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya; Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh and Telangana; In addition, Finance Ministers of States and UTs (with legislature) and senior officials from Ministry of Finance and States/UTs were also present.
Changes/Clarifications in GST Tax Rates:
Reverse charge mechanism (RCM) is being introduced on purchase of metal scrap from unregistered vendors. The buyer of scrap will be liable to pay tax under RCM even if the scrap seller is not registered in GST or his business is below the limit of GST registration.
The supplier shall register with GST whenever the turnover of the trader crosses the limit of Rs 40 lakh (for goods).
TDS of 2% will be applicable in the supply of metal scrap among registered traders.
Download the clarification on New Provision of 2% TDS on Metal Scrap as Recommended in 54th GST Council Meeting: Key Points, Modus Operandi, and FAQs situated at the end of Article.
The long-awaited demand of the lead recycling industry has been fulfilled.
