GST Rate on Iron and Steel

Iron and steel are key products in the manufacturing and construction sectors. Under the Goods and Services Tax (GST) regime, the applicable GST rate on various iron and steel products is primarily 18%. However, there are variations depending on the type of product.

For example, basic products like iron and steel scrap attract an 18% GST, while steel pipes and plates are taxed at a rate of 18% as well. Stainless steel products are also taxed at 18%, while TMT bars and rods used in construction fall under the same category and attract the same GST rate.

India is the second largest producer of iron and steel in the world. The availability of raw materials locally like iron ore and coal and the low cost of labour have contributed to India’s dominance in this sector. Iron and steel are primary requirements of the construction industry and are commonly used in the manufacturing of machine parts. 

This article explains the GST rates charged on iron and steel.

GST rates on iron and steel

The manufacturing and sale of all kinds of iron and steel like iron rods, bars, and scraps of iron and steel, etc. are charged at the rate of 18%. Different rates have been provided for different kinds of articles made of iron or steel.

HSN codes for iron and steel 

Most of the iron and steel products fall under the 18% GST category. These include raw materials, structural elements, and finished goods such as TMT bars, steel plates, and sheets. However, certain specialised steel products and some steel scrap might have additional provisions.

The HSN code for iron and steel products is 72, and it is used to classify these products for GST purposes. Different subcategories exist under this HSN code depending on the specific nature of the product.

Previous tax laws on iron and steel

There were two different kinds of taxes that were levied under pre-GST laws on the manufacture of iron and steel (in any form) before reaching the end consumer. Excise duty was charged at the rate of 12.5% and the VAT rate was around 5%, taking the total taxes imposed to about 17.5%. In the case of interstate sales, CST was charged instead of VAT at 2% with C-Form and 5% otherwise.

Impact of GST on Iron and Steel

Kitchen utensils like stainless steel cookers, pans, spoons, ladles, etc. have become a little cheaper as they are charged at a GST rate of 12%. Under VAT laws, the same were liable to tax at around 17.5%. However, other articles made of iron and steel like barbecue sets, radiators, iron and steel rods, etc. have become slightly more expensive under GST as they are now liable to a rate of 18% against 17.5%.

The iron and steel industry has been enjoying the benefit of a lower tax rate on major inputs like coal and iron ore, which is subject to a levy of GST at 5%. Transportation services used for transporting steel is kept under the 5% bracket which has helped in reducing logistics costs.

H. Shivramkrishnan (Director, Commercial of Essar Steel) had quoted before the implementation of GST, “We expect the requirement of working capital to go up in the immediate future. But going forward, GST will have a beneficial impact on the steel sector and the economy.”