: AIIFA demands reverse charge mechanism in GST #FinanceIndia #StockMarketNEWS AIIFA demands reverse charge mechanism in GST New Delhi, Feb 17 (KNN) The All India Induction Furnaces Association

@StockMarketNEWS Mon 20 Feb, 2023

Posted in: #FinanceIndia #StockMarketNEWS

AIIFA demands reverse charge mechanism in GST #FinanceIndia #StockMarketNEWS
AIIFA demands reverse charge mechanism in GST New Delhi, Feb 17 (KNN) The All India Induction Furnaces Association (AIIFA), a body of scrap steel manufacturers, on Thursday urged the GST Council to consider bringing the steel scrap recycling industry under a reverse charge mechanism in line with the transport services.

The scrap steel industry that mostly sources its raw material from the unorganised scrap dealers had been demanding a sought rationalisation in GST structure through a ‘reverse charge mechanism’ where the onus to pay the tax would lie with the manufacturers.

Currently under the GST system, the liability to pay the tax falls on the supplier. If the reverse charge mechanism comes into play, the onus will be on the recipient of the supply of goods or services.

Sudhir Goyal, a member of All India Induction Furnaces Association, said, “a large number of scrap dealers have been found guilty of claiming fraudulent input tax credit. Tax authorities ultimately catch manufacturers.”

Goyal said the reverse charge mechanism would help solve the issue of fraudulent input tax credit claims by scrap dealers.

AIIFA in its recommendations to the GST council has asked for an exemption from GST for supply of metal scrap when it is sold by various scrap dealers, except for the last leg of the chain when it is sold to manufacturers.

In that case, the GST would be collected from the manufacturers through a reverse charge mechanism, where the manufacturers would be responsible for paying the tax rather than the scrap dealers, it said.

The association has also suggested the introduction of separate entries in the GST schedules and HSN (Harmonised System of Nomenclature) codes for the old scrap and new scrap.

Presently, the Old scrap is already taxed at the time of the original products sale and the reverse logistics involves only collection and reuse. New scrap, however, is generated from a definite economic activity. Therefore, the two types of scrap should not be treated equally from a tax perspective, the association said in a statement.

“The current GST system is resulting in a lot of litigation and making doing business very difficult. Reverse charge mechanism will lead to increase in revenue to the government as it will help plug leakages and it will save us from unnecessary litigation,” said Mohinder Gupta, President of?Induction Furnace Association Mandi Gobindgarh, Punjab. (KNN Bureau)