Selling Factory Scrap: A Practical Guide for Manufacturers

Sort scrap where it's produced

The biggest lever on what your scrap earns is segregation at source. Separate bins for each metal and grade — MS turnings, SS turnings, copper, brass, aluminium, and non-metal waste — stop valuable material being sold at the lowest mixed rate.

• Label bins by metal and grade at each machine or line
• Keep turnings dry and away from coolant and oil where possible
• Store copper and brass securely — they are high value
• Keep non-metal waste completely separate

Set up a regular collection

Units that generate scrap every week or month benefit from a fixed pickup schedule: less floor space tied up, fewer one-off negotiations and more consistent rates. Agree the frequency, the grades covered and how rates are set — for example, linked to the market on the day of pickup.

Weighing and records

For anything beyond small loads, use a verified weighbridge and keep the slip with gross, tare and net weight. Match each weighbridge slip to the invoice. This protects both sides and makes audits and stock reconciliation easier.

Invoices, GST and tax: talk to your CA

Scrap sales by a business are taxable supplies, and the government has changed how tax on metal scrap is collected more than once in recent years — including GST provisions specific to metal scrap and tax collected at source on scrap sales. The right treatment depends on whether both parties are GST-registered and on the rules in force on the date of sale.

Before you start selling scrap regularly, confirm with your CA how your invoices should be raised, what tax applies, and what documents (such as e-way bills for transport) are needed for your consignments.

• Raise a proper invoice for every sale
• Keep weighbridge slips with the matching invoice
• Check e-way bill requirements for each consignment
• Review the current GST and TCS/TDS treatment of scrap with your CA

Old machinery and plant clearance

When machines are replaced or a unit is closing, share photos and a list of the equipment first so the buyer can give an estimate before visiting. Tell them about access — floor level, doors, whether a crane or forklift is available — so they bring the right equipment for dismantling and loading.