Steel mills call for rationalisation of GST rates on raw materials, by-products

The Indian Steel Association (ISA), an industry body of major steel mills that includes Tata Steel, JSW, SAIL, JSPL, among others – has written to the FinMin seeking rationalisation of GST rates on some steel-making raw materials like scrap and also by-products like slag.

The pitch is to bring rates down to 5%, from 18%, across the two categories to avoid tax evasion, litigation and penal action, and also bring down disruptions in the supply chain. A copy of the letter, reviewed by businessline, has also been forwarded to the Steel Ministry.

In its letter, the Association argued, rationalisation of GST rate on steel scrap from 18 per cent to 5 per cent will help curb evasion of taxes. And the reduction of rates will not have any impact to government revenue.

The GST input tax credit is available on scrap used in the production of steel products, the letter by ISA to Revenue Secretary, Sanjay Malhotra, said. Higher GST rate on scrap has led to increase in instance of evasion, specially when the sector is predominantly unorganised