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Current Tax Laws on Iron and Steel

India is, at present, the world’s second-largest producer of steel and iron, and it has managed to dominate the steel and iron sector mainly because of the ample availability of raw materials in our homeland, namely coal and iron ore.

 

The union government has waived off custom duty on the import of raw materials like coking coal and ferronickel. This move has helped the steel and iron industry reduce the cost of domestic production, which, in turn, has reduced the final price of the products. The government of India has also increased the export duty of iron ore by 50%, ensuring a higher availability in India.

 

Iron and steel are instrumental in manufacturing major machine parts and primary requirements in the construction industry. Domestic industries across India are benefitting from a unified GST system and a reduction in import rates. The current GST on steel and iron have favoured numerous industries and segments where steel and iron form the major constituents of most goods and products manufactured.

GST Rate on Steel & Iron in India

Let’s take a look at the iron GST rate and GST on steel that is applicable to various iron and steel items manufactured across different industries in India: 

Description

GST Rate

Pipes, hollow profiles and tubes of cast iron 

18%

Pipes, hollow profiles and tubes, seamless of iron (excluding cast iron) and steel 

18%

Iron and steel pipe or tube fittings like couplings, elbows, sleeves, etc.

18%

Railway track construction material including - rack rails, check rails, chair wedges, rail clips, bedplates, crossing frogs, fishplates, ties, point rods, sleepers, sole plates, etc.

18%

Iron and steel sheet piling (drilled and otherwise, punched or assembled from elements), shapes and selections, welded angles, etc.

18%

Structures (excluding prefabricated buildings) and other parts like lock-gates, lattice masts, roofing and framework, windows, door, bridges and other sections, shutters, pillar, columns of iron and steel (excluding transmission towers).

18%

Containers like tanks, reservoirs, vats, etc., for materials like steel and iron (excluding compressed or liquified gas), with capacity exceeding 300L, lined and heat-insulated, or not, excluding mechanical or thermal equipment fitting

18%

Containers like casks, cans, boxes, tanks, etc., for any material (not including liquified or compressed gas), with capacity not exceeding 300L, lined and heat-insulated, or not, excluding mechanical or thermal equipment fitting

18%

Iron and steel containers of liquified or compressed gas

18%

Stranded wire, cables, ropes, slings, plaited bands, etc, of iron or steel (not electrically insulated)

18%

Steel or iron barbed wire, single flat wire, twisted hoop, the kind used for fencing, etc

18%

Netting and fencing of steel or iron wire, grill, cloth (including various bands), expanded metal of steel or iron

18%

Iron and steel chains and parts thereof, which fall under 7315 20/81/82/89/90

18%

Steel or iron staples, corrugated nails, drawing pins, with or without heads of other materials (excluding heads of copper)

18%

Grapnels, anchors and parts thereof, made of iron or steel

18%

Needles for sewing or knitting, embroidery stilettos, crochet hooks, safety pins, etc., made of steel or iron

18%

Screw hooks, bolts, buts, screws, cotters, rivets, washers, etc, made of iron or steel

18%

Steel and iron springs or leaves for the springs

18%

Steel and iron LPG stoves, barbeques, plate warmers and other such non-electric domestic appliances, and other parts (excluding kerosene burners, stoves or wood burning stoves)

18%

Iron and steel central heating radiators (not electrical), air distributors and heaters, which are non-electrical, incorporating blower or motor-driver fan, and various spare parts thereof

18%

Grinding balls, rudders for ships or boats, plates and frames for sewage water, and other such cast articles made of iron or steel

18%

Pot scourers of iron or steel wool, polishing pads, gloves, etc

18%

Iron and steel sanitary ware and other parts thereof

18%

Iron or steel tyre bead wire rings, automobile and earth-moving implements, belt-lacing of steel, fasteners for machinery belts, frames for sewages, enamelled ironware (excluding utensils), articles of clad metal, and other such articles, forged or stamped.

18%

Geometry boxes, pencil sharpeners, colour boxes and other such art ware of iron

12%

Kitchen, table or other such household items like utensils, made of iron or steel

12%

Wood burning stoves, kerosene stoves or burners, etc, of iron or steel

12%

Animal Shoe nails

12%

Impact of GST Rate on Iron and Steel in India

Earlier, commerce transactions involved multiple indirect costs when goods were moved from one region to another. It led to the increased final price of products, thereby fuelling inflation. However, with the introduction of Goods and Services Tax, the unified tax structure has been instrumental in curbing this problem. 

 

Here are some of the impacts of the GST rate on steel and iron on Indian industry: 

 

  • Reduction in the GST rate to 18% (earlier 20%) has led to a reduction in the cost of production and an additional 2% savings for the industry.

  • Steel industry initially had an extensive increase in imports, but a unified GST rate now acts as a protection for the iron and steel industry. 

  • Various kitchen utensils like stainless steel cookers, spoons, pans, etc., have seen a reduction in manufacturing and final MRP due to the 12% GST rate levied on this segment. 

  • Iron and steel industry is also enjoying the lower tax rate on raw materials, like iron ore and coal, which stands at just 5% at present. 

  • Logistic costs for the industry have also come down as the transportation services that transport steel in India fall under the 5% bracket. 

GST has played a major role in shaping the competitiveness of steel and iron industry in the global markets and ensured their sustainability in the process. This will in turn help develop rural and semi-urban areas, thereby contributing to the national economy.

 

Reduction in GST rate on steel and GST on iron has shown a positive effect on the country’s domestic production. It will also prove useful in enabling smooth transit between states and eliminating corruption.

 

With the GST rate on steel and iron being transparent, the burden of multiple taxes borne across the transit cycle has also decreased largely. The impact of unified GST rates is very promising for the nation at large as it will greatly contribute to helping various industries, like iron and steel, creating new jobs, curbing inflation, and boosting the economy and growth of India.

FAQs on GST on Steel & Iron

  • ✔️Explain the impact of the GST rate on iron and steel?

    Goods and Service Tax has certainly made a promising impact on the iron and steel industry in India by getting rid of the middlemen, thereby reducing corruption at large. Major tax slabs have been reduced because of this unified tax structure and this is now contributing largely to the growth in production of iron and steel in India. Exports have increased due to the unified tax structure and GST move, which will also add to the nation's reserve.

    The economy of the country is also showing a positive spike because of the push that growth and development sectors have received by unifying tax structure.

  • ✔️What are the GST rates on steel and iron in India?

    The GST rate on iron and steel in India is 18% while that of inputs involved in various industries is 5%.

  • ✔️What is the list of steel and iron products on which have to pay GST at 18%?

    Here is a list of iron and steel products that are levied with 18% GST – 

    • Drums, water tanks, cans and reservoirs that are made of steel or iron.

    • Lock gates, pillars, window framework, bridges, and other such related infrastructure.

    • Sanitary ware and other washroom fittings that are made of iron or steel.

    • Tram and railway tracks

    • Knitting needles

    • Different types of containers that are used for compressed gas

  • ✔️What is the list of steel and iron products on which have to pay a GST of 12%?

    Here is a list of iron and steel products that are levied with 12% GST – 

    • Tables, kitchen interiors and other such home items made of steel or iron.

    • Geometry and pencil boxes, sharpeners, and other such school stationery items.

    • Stainless steel cookers, spoons, pans and other iron and steel utensils.

    • Sewing needles and shoe nails for animals.

    • Kerosene burners, stove burners, etc.

  • ✔️What is the GST rate on TMT bar?

    The manufacturing and sale of different kinds of steel and iron items like TMT rods, bars, scrap, etc., have a GST rate of 18% in India. 

  • ✔️Can we claim ITC on iron and steel?

    ITC, i.e., Input Tax Credit is not available for renovation, construction or reconstruction, addition, repair, etc., of immovable property, even if the goods or services herein are used in course of furtherance of the business. However, these rules do not apply to the plants or machinery.

  • ✔️What is the HSN code for iron scrap?

    The HSN code for iron scrap is 72043000. As per the GST law, the taxpayer has to declare this code on the tax invoice and while filing the GST returns.