Published 26 Jul 2025. GST rules change often; check the latest position or ask us before acting on it.
Notification No. 25/2024-Central Tax, issued on 9 October 2024, clarifies TDS rules for metal scrap transactions and reflects the government's push for better tax compliance in the metal scrap sector.
Summary of the notification
On 9 October 2024, the Ministry of Finance released Notification No. 25/2024-Central Tax, amending Notification No. 50/2018-Central Tax. This update clarifies Tax Deduction at Source (TDS) under Section 51 of the CGST Act, 2017, specifically for metal scrap transactions.
Key changes
- Applicability: Registered buyers of metal scrap (Chapters 72–81) are included.
- TDS rate: 2% TDS on transactions over ₹2,50,000.
- Registration: Buyers must obtain separate GST registration (Form REG-07) for TDS deduction.
- TDS credit: Suppliers receive monthly TDS credits in their cash ledger.
- Exemption: No exemptions for metal scrap transactions from TDS.
- Compliance: From 10 October 2024, buyers must file GSTR-7 and issue TDS certificates (GSTR-7A).
What is TDS under GST?
TDS under GST is a system where buyers deduct a percentage of the payment for specified goods or services and remit it to the government, as per Section 51 of the CGST Act and CGST Rule 66.
Effective date
The amendments are effective from 10 October 2024 for all eligible transactions.
Applicability of TDS
- 2% TDS is required on metal scrap purchases exceeding ₹2,50,000 per transaction.
- Breakdown: CGST 1% + SGST 1% for intra-state, and IGST 2% for inter-state transactions.
- The ₹2,50,000 limit applies to each transaction individually.
Customs Tariff chapters covered
- Chapter 72: Iron and steel
- Chapter 73: Articles of iron and steel
- Chapter 74: Copper
- Chapter 75: Nickel
- Chapter 76: Aluminium
- Chapter 78: Lead
- Chapter 79: Zinc
- Chapter 80: Tin
- Chapter 81: Other base metals and cermets
Buyers must deduct TDS for transactions that meet the specified threshold.
Compliance requirements for TDS deduction
- Obtain separate registration: Register using Form REG-07 for TDS deduction.
- Monthly filing: Pay TDS and file Form GSTR-7 by the 10th of the following month.
- TDS certificate: The GSTR-7A certificate confirms TDS deduction and deposit.
- Exemptions: No TDS applies to imported metal scrap.
- Supplier credit: Suppliers receive TDS credit in their cash ledger monthly.
- Supplier benefits: TDS credit can be used monthly to offset liabilities or claim refunds, improving cash flow.
Conclusion
Notification No. 25/2024-Central Tax sets out new TDS requirements for metal scrap transactions from 10 October 2024. Buyers must deduct 2% TDS on transactions above ₹2,50,000 and take a separate GST registration. The aim is better compliance and tax collection, with monthly TDS credits improving suppliers' liquidity.