Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Indian secondary steelmakers have called for easing of GST regulation on scrap trade and requested for the rationalization of GST rate on scrap to 5pc from the existing 18pc, according to local media. 


All India Induction Furnaces Association (AIIFA), a leading secondary steel body, has requested the finance ministry to correct the GST framework, which is disrupting the scrap supply chain and impacting the production of secondary mills.


Increased scrutiny by tax authorities has led to several input tax credit frauds. Mills complained that despite proper documentation input credits claimed by steelmakers have been disputed by the tax authorities. 


The association has suggested the government to exempt GST on the sale of scrap between dealers and impose a levy on the scrap sold to manufacturers on a reverse charge basis.


Delays in receiving input credits and additional scrutiny on certain scrap dealers, due to alleged input tax credit frauds, have added to the challenges faced by small and medium steelmakers. In addition to higher ferrous scrap prices mills are struggling with higher power tariffs, diversion of industrial oxygen and low sales of steel products amid weak demand from downstream industries.

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