Goods and Service Tax Council considered reducing the tax rate on steel scrap from the current rate 18 per cent at its upcoming meeting, which will be held in Lucknow next week.
Steel manufacturers faced enforcement action including the blocking of input tax credit and supply side disruption because of fake invoicing by scrap dealers.
Recommendations are to reduce tax rate from 18 per cent to 5 per cent. Which will help government earn additional revenue of about Rs 5000 crore annually according to estimates.
The government might reduce incentive for fake billing substantially by reducing the tax rate. The Goods and service tax on other kinds of scraps such as wood, plastic, rubber has already been reduced from 18 per cent to 5 per cent.
Sudhir Goyal member, All India Induction Furnace Association said that the steel scrap recycling industry is struggling under GST given the trust deficit between the government and the industry.