Key points
- Invoice by weight: quantity with a unit code such as KGS or MTS, and the rate per unit. Show the HSN at 6 digits if aggregate turnover is above ₹5 crore.[1]
- Metal scrap from an unregistered seller: the registered buyer pays GST under reverse charge, even if the seller is below the threshold (54th GST Council, notified from October 2024).[2] Verify
- Metal scrap between registered persons: the buyer deducts 2% GST TDS (1% CGST + 1% SGST, or 2% IGST) where the contract value exceeds ₹2.5 lakh, excluding tax.[2][3]
- Income-tax TCS: a seller of scrap collects 2% under section 394 of the Income-tax Act 2025, unless the buyer declares it is for manufacturing, not trading.[4]
- Weighbridge trips of up to 20 km and back need no e-way bill if a delivery challan goes with the goods.[5]
Billing by weight
Rule 46 of the CGST Rules requires the quantity and its unit, the HSN, the taxable value and the tax on every tax invoice.[1] For steel, that means:
- Unit: use the GST unit code that matches how you sell: KGS for kilograms, MTS for metric tonnes, NOS for pieces. The same unit should flow to the e-invoice and the e-way bill.
- Rate: per kg or per tonne, before tax. Show cutting, loading or bending charges as separate lines, because they are part of the value of supply.
- Actual or theoretical weight: TMT bars, angles and pipes are often sold on standard (theoretical) weight per metre, sheets and coils on actual weight. Agree which one in the quotation, and write it on the bill ("theoretical weight as per section table" or "actual weight as per weighbridge slip no. …").
- Weighbridge slips: attach or note the slip number. If you take goods up to 20 km to a weighbridge and back, no e-way bill is needed with a delivery challan under rule 55.[5]
Iron and steel products under chapters 72 and 73 were not in the 56th Council's rate change lists, so the rate on most of them did not change on 22 September 2025; confirm your exact HSN in the HSN finder.[6] Verify
Buying metal scrap from an unregistered seller: reverse charge
Kabadiwalas and small collectors are often unregistered. The 54th GST Council recommended reverse charge on metal scrap supplied by an unregistered person to a registered person, with the buyer paying tax even if the seller is below the registration threshold, and the seller registering once it crosses the threshold.[2] It was notified with effect from 10 October 2024 (Notification 06/2024-Central Tax (Rate), as reported). Verify
In practice the buyer pays the GST in cash in GSTR-3B, issues a self-invoice for the purchase, and claims the ITC on it in the same or a later return. Your CA will confirm the self-invoice timing and the GSTR-3B tables. Verify
Buying metal scrap from a registered seller: 2% GST TDS
The same Council meeting recommended 2% TDS on supplies of metal scrap between registered persons.[2] It works through section 51 of the CGST Act: the buyer deducts tax from the payment where the value of supply under a contract exceeds ₹2,50,000, excluding GST shown on the invoice, and pays it to the government within 10 days after the month ends.[3] The deduction is 1% CGST + 1% SGST for an intra-state supply, or 2% IGST for inter-state.[3] Verify The buyer needs a separate GST registration as a TDS deductor and files GSTR-7; the seller claims the TDS in its cash ledger.[3] Verify
Selling scrap: income-tax TCS
Under the Income-tax Act 2025, a seller of scrap collects tax at source of 2% from the buyer (section 394, Table Sl. 4), at the time of debit or receipt, whichever is earlier.[4] No TCS is collected if the buyer, a resident, gives a written declaration that the scrap will be used for manufacturing, processing or producing, and not for trading.[4] Because TCS applies, the buyer does not also deduct income-tax TDS under section 393 Sl. 8(ii) on that purchase.[7]
Worked example, in rupees
Bansal Steel Traders, Raipur (sample firm), registered in Chhattisgarh, has these transactions in November 2026 (all intra-state, GST at 18% on the goods below; check your HSN):
| Transaction | Taxable value | GST | Special rule | Amount |
|---|---|---|---|---|
| Sells 8.4 MTS TMT bars at ₹52,000/MTS (theoretical weight) | ₹4,36,800 | ₹78,624 | None | Bill total ₹5,15,424 |
| Buys MS scrap from an unregistered collector, 3,200 KGS at ₹31/kg | ₹99,200 | ₹17,856 | RCM: Bansal pays GST in cash | ₹17,856 |
| Buys HMS scrap from a registered dealer under one contract | ₹4,00,000 | ₹72,000 | GST TDS 2% (contract above ₹2.5 L) | ₹8,000 deducted |
| Sells scrap to a trader | ₹2,00,000 | ₹36,000 | Income-tax TCS 2% (sec 394) | TCS collected; base per your CA Verify |
The registered scrap purchase. Bansal pays the dealer ₹4,00,000 + ₹72,000 − ₹8,000 = ₹4,64,000, deposits ₹4,000 CGST + ₹4,000 SGST TDS by 10 December 2026, and the dealer claims ₹8,000 in its cash ledger.[3]
The unregistered purchase. Bansal pays the collector ₹99,200 only, pays ₹17,856 GST itself in GSTR-3B under reverse charge, and claims it back as ITC as the rules allow. Verify
E-way bills for steel
Steel loads are heavy and valuable, so most need an e-way bill: the consignment value, including GST, is above ₹50,000 almost every time.[5] Over-dimensional cargo, such as long sections on a trailer, gets one day for every 20 km instead of 200 km.[8] See e-way bill validity and the validity calculator.
How Moharbill helps
- Rates per kg or tonne, coil and sheet units, and the weighbridge slip number on the bill. See billing software for steel traders.
- E-invoice and e-way bill on save, with ODC validity worked out when you mark the load as over-dimensional.
- TDS on purchases under section 393 tracked per supplier on Pro and Business; see the TDS tracker.
Frequently asked questions
Is reverse charge applicable on metal scrap?
Yes, for metal scrap supplied by an unregistered person to a registered person. The 54th GST Council recommended it and it was notified from October 2024; the registered buyer pays the GST.
What is the GST TDS on metal scrap?
2% (1% CGST and 1% SGST, or 2% IGST) on supplies of metal scrap between registered persons, deducted by the buyer under section 51 where the contract value exceeds ₹2.5 lakh excluding tax.
Is TCS applicable on sale of scrap in FY 2026-27?
Yes. Section 394 of the Income-tax Act 2025 requires the seller of scrap to collect TCS at 2%, unless the buyer declares the scrap is for manufacturing and not for trading.
Should a steel invoice use actual or theoretical weight?
Either, as agreed with the buyer. State which one on the quotation and the invoice, and show the quantity with its unit (KGS or MTS) and the rate per unit.
Do I need an e-way bill to take goods to a weighbridge?
Not for movement of up to 20 km from your place of business to a weighbridge and back, if a delivery challan goes with the goods.
Sources
All read on 17 Oct 2026.
- CGST Rules 2017, rule 46 (tax invoice particulars), CBIC; NIC e-invoice portal notice on 6-digit HSN above ₹5 crore. taxinformation.cbic.gov.in · einvoice1.gst.gov.in
- PIB / GST Council, "Recommendations during 54th meeting of the GST Council", 9 Sep 2024 (RCM on metal scrap from unregistered persons; 2% TDS B2B). gstcouncil.gov.in
- CGST Act 2017, section 51 (TDS; ₹2.5 lakh contract value excluding tax; deposit within 10 days), CBIC. taxinformation.cbic.gov.in
- Income-tax Act 2025, section 394 (TCS on scrap 2%; manufacturing declaration). incometaxindia.gov.in
- CGST Rules 2017, rule 138 (₹50,000; 138(14)(n) weighbridge up to 20 km), CBIC. taxinformation.cbic.gov.in
- PIB, "Recommendations of the 56th Meeting of the GST Council", 3 Sep 2025, Annexures I and II. gstcouncil.gov.in
- Income-tax Act 2025, section 393, Table Note 1(a). incometaxindia.gov.in
- NIC e-way bill portal: validity 200 km per day for normal cargo from 01-01-2021 (Notification 94/2020-CT); ODC 20 km per day per rule 138(10). docs.ewaybillgst.gov.in
Written by the Moharbill team
We build GST billing for distributors at Hexa Secure Labs and write these guides from the rules we code into the product. Spotted something out of date? Tell us and we will fix it within two working days.