Reverse Charge on Scrap could be introduced by GST Council Meeting

In light of the operational challenges and legal disputes brought on by the non-compliance by informal sector scrap dealers who frequently fail to deposit GST dues collected from larger buyers, the government will take into consideration and then present the industry’s demand to shift the GST levy on the purchase of scrap metal to a reverse charge mechanism before the GST Council.

Sanjay Malhotra, the revenue secretary, hinted that the assessment would not be limited to just steel or metal trash but also other scrap materials to take a comprehensive view of the GST framework. Instead of relying on the sellers to pay the taxes and then provide tax credits, the GST system’s reverse charge mechanism enables buyers to pay the GST owed for their inputs directly.

At a post-budget meeting in Hyderabad, Suresh Kumar Singhal, vice president of the Federation of Telangana Chambers of Commerce and Industry and managing director of Vijay Iron Foundry, suggested imposing GST on scrap purchased by manufacturers using a reverse charge mechanism. Mr. Malhotra was responding to this suggestion.