In a potential ray of hope for the metal industry, which has been looking for a change in the treatment of goods and services tax (GST) on steel scrap, the upcoming 52nd meeting of the GST Council on October 7 is expected to engage in a detailed discussion on the matter.
Sources have disclosed that the GST Council is likely to discuss the metal industry’s appeal to levy GST on steel scrap using the reverse charge mechanism (RCM). Currently, steel scrap is subjected to an 18% GST rate.
Under the reverse charge mechanism, the responsibility to pay tax lies with the recipient of the goods or services, rather than the supplier, for specific categories of supply.
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Given that the fitment committee, appointed by the GST Council, has already thoroughly examined the proposal, it is expected to request some more time to come to clarity on whether to accept or reject the appeal, according to informed sources.
The sources further revealed that the fitment committee has expressed doubts regarding the feasibility of implementing the reverse charge mechanism. However, it acknowledges the need for a solution to address the challenges faced by the industry.
To comprehensively analyze the industry’s proposal, the fitment committee believes that a sub-committee comprising officials should be established, as per the sources.
Consequently, the committee has taken the decision to form a sub-committee that will carefully study the intricacies of the industry’s proposal and come to a practical solution. The sub-committee has already met twice and is expected to present its report in the near future, sources added.
