On October 9, 2024, the Ministry of Finance issued Notification No. 25/2024-Central Tax, which amends the existing Notification No. 50/2018-Central Tax dated September 13, 2018. This amendment, issued under the powers conferred by Section 51 of the Central Goods and Services Tax (CGST) Act, 2017, introduces changes related to the tax deducted at source (TDS) provisions under the GST regime. The amendments specifically affect registered persons dealing in metal scrap and make significant revisions to the scope of TDS applicability.
Key Changes Introduced:
The notification introduces two key amendments:
1. Inclusion of Registered Persons Dealing in Metal Scrap (Chapters 72 to 81)
- A new clause (d) has been inserted into the original notification No. 50/2018. This clause addresses registered persons receiving supplies of metal scrap falling under Chapters 72 to 81 of the Customs Tariff Act, 1975.
- According to the amendment, registered persons receiving supplies of metal scrap from other registered persons will now be subject to TDS under Section 51 of the CGST Act.
Text of the Amendment:
“(d) any registered person receiving supplies of metal scrap falling under Chapters 72 to 81 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), from another registered person.”
This addition is significant for businesses dealing in metal scrap as it brings these transactions under the TDS provisions, ensuring tax compliance and proper documentation in the supply chain.
2. Substitution of the Third Proviso: Exemption for Certain Transactions
- The third proviso of the notification has been substituted with a new proviso, which clarifies the exemption from TDS provisions for certain transactions between specified persons under Section 51(1) of the CGST Act.
Revised Proviso:
“Provided also that nothing in this notification shall apply to the supply of goods or services or both, which takes place between one person to another person specified under clauses (a), (b), (c), and (d) of sub-section (1) of Section 51 of the said Act, except the person referred to in clause (d) of this notification.”
This amendment essentially exempts certain transactions between specified persons from the TDS provisions, except for those involving persons receiving metal scrap supplies under the newly introduced clause (d). This creates a clear distinction in the application of TDS rules for metal scrap suppliers and recipients, encouraging greater tax compliance for metal scrap transactions.
Notification No. 25/2024-Central Tax
Notification No. 24/2024 – Central Tax
Summary of the Amendments:
| Clause | Provision Before Amendment | Provision After Amendment |
|---|---|---|
| Clause (d) | No clause (d) existed. | Registered persons receiving metal scrap from other registered persons will be subject to TDS under Section 51 of CGST Act. |
| Third Proviso | The proviso exempted certain transactions between persons specified under Section 51(1). | The amended proviso continues the exemption but excludes persons receiving metal scrap (as per clause (d)). |
Implications of the Amendments:
- TDS Applicability on Metal Scrap Transactions:
- With the inclusion of clause (d), businesses dealing in metal scrap must now ensure compliance with TDS provisions under the CGST Act. This will impact registered persons who receive supplies of scrap metals categorized under Chapters 72 to 81 of the Customs Tariff Act, 1975.
- The amendment will require such registered persons to deduct tax at source (TDS) on these transactions, contributing to better tax tracking and accountability in the metal scrap supply chain.
- Exemptions for Specified Persons:
- The revised third proviso maintains the exemptions from TDS for transactions between certain persons specified under Section 51(1) of the CGST Act, with the exception of metal scrap recipients. This ensures that metal scrap transactions remain within the TDS framework, promoting compliance in this sector.
- Enhanced Compliance for Metal Scrap Industry:
- By bringing metal scrap transactions under the scope of TDS, the amendment aims to ensure better compliance and monitoring of transactions within this sector. Businesses involved in such transactions will need to adhere to TDS provisions, maintain proper documentation, and ensure timely tax deductions.
Effective Date:
The provisions introduced by Notification No. 25/2024-Central Tax will come into effect from October 10, 2024. Registered persons dealing in metal scrap should immediately review their processes to ensure compliance with the newly introduced TDS requirements.
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