GST Council Proposes 2% TDS on Specified Waste and Scrap Transactions

Key facts

• The 57th Goods and Services Tax (GST) Council has proposed a 2% tax deducted at source (TDS) on specified waste and scrap transactions between registered businesses, along with a reverse charge mechanism (RCM) on purchases from unregistered suppliers.
• The proposed levy covers plastic waste, discarded tyres, electrical and electronic scrap, and used cooking oil.
• Registered buyers must deduct TDS when purchasing from registered suppliers and pay GST under RCM on purchases from unregistered sellers, even below the GST registration threshold.
• The recommendations were detailed in FAQs issued by the finance ministry, following a similar compliance framework for metal scrap introduced after the 54th GST Council meeting.
• Seaweed-extract biostimulants registered under the Fertiliser Control Order, 1985, will be classified as fertilisers under HSN heading 3101, while products containing plant growth regulators will not qualify for the concession.
• Second-hand car dealers can avail the concessional GST margin scheme while claiming input tax credit on eligible business inputs, but not on the purchase of the second-hand vehicles themselves.
• Retreaded tractor tyres will be aligned with new tractor tyres for GST treatment, and a separate nil-rate entry has been created for psyllium seeds.
• Past disputes involving eligible seaweed-based biostimulants and sublimation paper are proposed to be regularised on an 'as is where is' basis.