GST on Steel in India

Working out the GST on steel

Steel is taxed at a flat 18% across bars, rods, pipes and scrap, so the arithmetic is straightforward. Multiply the taxable value by 18 percent to get the GST, then add it to the base price for the total.

• For an intra-state sale, the 18% splits into 9% CGST and 9% SGST.
• For an inter-state sale, a single 18% IGST applies instead.
• The calculator on this page is pre-set to the 18% rate and handles both cases.

A worked example

Suppose a steel order has a taxable value of ₹1,00,000 before tax. Applying 18% GST works out as follows.

Steel rates across the chapter

Steel is one of the simpler categories: a single 18% rate runs across Chapters 72 and 73, from raw scrap to finished structural sections. The Council deliberately kept one rate to remove the grade-by-grade disputes that plagued the pre-GST regime. GST 2.0 left it untouched.

Mild, alloy and non-alloy steel all carry the same 18%. Grade does not change the rate, only the HSN sub-code. No compensation cess applies to any steel product.

The ITC rule that catches builders

This is the single most important thing on this page. Steel bought for resale or for manufacturing carries full input tax credit. Steel used to construct immovable property for your own use does not, because Section 17(5) blocks it. So a trader buying TMT bars to sell claims the credit, and a builder buying the same bars for a project sold to customers claims it, but a company buying steel to build its own office building cannot. The exception inside the exception: steel used in plant and machinery is allowed even when it becomes part of an immovable structure. Getting this classification wrong is one of the more expensive mistakes in construction accounting.

The HSN code matters more than usual here

Because every steel product carries 18%, it is tempting to use a generic code. Do not. If an invoice carries a broad iron entry instead of the specific rebar code 7214, the system may reject the ITC and an auditor can treat it as misreporting. The rate is identical either way, but the error still blocks the credit. Businesses up to ₹5 crore turnover need 4-digit codes on B2B invoices; above that, 6-digit. Since February 2025 the code is picked from a dropdown in GSTR-1 rather than typed, which catches some errors earlier.

Freight, e-way bills and job work

Steel moves in bulk and the paperwork follows. If the seller bills transport on the same invoice, it forms part of the taxable value and carries the steel rate. If a separate transporter bills you, the goods transport rules apply to that invoice instead. An e-way bill is required above ₹50,000 of consignment value and must match the invoice HSN, since mismatches between the e-way bill, the invoice and GSTR-1 are a routine trigger for scrutiny in this sector. Job work such as cutting or bending is a service billed on the processing charge, with the principal sending material out under a delivery challan rather than an invoice.

Reverse charge on scrap

Scrap has its own wrinkle. When a registered business buys steel scrap from an unregistered supplier, which is common in the informal collection trade, reverse charge can apply: the buyer accounts for the GST directly rather than paying it to the supplier, self-invoices, and claims the same amount back as credit where the scrap feeds a taxable output. The net cash effect is usually nil, but the compliance step is not optional and missing it is a routine audit finding for re-rollers and foundries.

Imports and exports

Imported steel attracts 18% IGST calculated on the assessable value plus customs duty, and a registered importer claims that IGST back as input tax credit. Exports run the other way and are zero-rated: an exporter can either supply under a Letter of Undertaking without paying IGST and claim a refund of accumulated input credit, or pay IGST and reclaim it. Since steel exporters carry substantial input credit, the LUT route is usually the working-capital-friendlier one.

Frequently asked questions