Looking for expert help with GST and income tax for steel fabrication and welding workshops India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Steel gates, grills, shutters, sheds, roof trusses, staircases and tanks, and the angles, sheets, pipes and electrodes you buy, are all 18% GST from 22 September 2025 (Notification 9/2025-CT(Rate), Schedule II).
- Job work on a factory's steel is 18% too. Iron and steel goods aren't on the 5% job work list in Notification 15/2025-CT(Rate).
- A gate or shed you fabricate and fix at a building is usually a works contract, a supply of services at 18%. Services push your GST registration limit to Rs 20 lakh.
- Scrap has its own rules: reverse charge when you buy from an unregistered seller, 2% GST TDS on registered sales above Rs 2.5 lakh per contract, and income tax TCS of 2% from 1 April 2026 if you're a "seller".
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of the rest, for turnover up to Rs 2 crore (Rs 3 crore if cash is within 5%).
What is the GST rate on steel fabrication work in India? Steel fabrication is taxed at 18% GST. Fabricated structures, gates, shutters and roofing frames of iron or steel fall under heading 7308 (Notification 9/2025-Central Tax (Rate), Schedule II, S. No. 286, in force 22 September 2025). Job work on someone else's steel and supply-and-fix works contracts are also 18%.
A fabrication workshop rarely runs on one kind of job. A homeowner wants a main gate fixed by Diwali. A builder orders 40 window grills to collect from your yard. A factory sends two tonnes of its own steel for you to cut and weld into frames, and pays only for labour. Then there's the pile of offcuts the scrap dealer buys every month. Each of these is a different supply under GST and income tax, even though the rate is 18% almost everywhere. This guide walks through each one for FY 2025-26 (AY 2026-27), with the Income-tax Act 2025 sections that apply from 1 April 2026. If you also make aluminium or UPVC windows, our window fabricators' guide covers those items.
Which GST rate applies to what you buy and sell?
Everything in a typical welding shop sits in Schedule II of Notification 9/2025-Central Tax (Rate): 9% CGST plus 9% SGST, so 18% within your State, or 18% IGST on a sale to another State. Your steel, electrodes and grinding discs carry the same rate as your output, so input tax credit (ITC) normally covers most of the GST on your bills.
Comparison
GST on Steel Fabrication Items and Services (from 22 September 2025)
| What you buy or sell | HSN / SAC and entry | GST |
|---|---|---|
| Gates, shutters, doors, windows, roof trusses, sheds, staircases, railings and columns of iron or steel | 7308, Sch II S. No. 286 | 18% |
| Steel tanks above 300 litres | 7309, Sch II S. No. 287 | 18% |
| Grills, netting and fencing of steel wire; expanded metal | 7314, Sch II S. No. 292 | 18% |
| Other articles of iron or steel (brackets, clamps, stands) | 7326, Sch II S. No. 305 | 18% |
| Steel furniture (racks, cots, almirahs) | 9403, Sch II S. No. 612 | 18% |
| MS sheets and plates (flat-rolled) | 7208 to 7212, Sch II S. No. 267 | 18% |
| Bars and rods | 7213 to 7215, Sch II S. No. 268 | 18% |
| Angles, channels and sections | 7216, Sch II S. No. 269 | 18% |
| Pipes and hollow sections | 7306, Sch II S. No. 284 | 18% |
| Welding electrodes and filler wire | 8311, Sch II S. No. 385 | 18% |
| Welding machines | 8515, Sch II S. No. 488 | 18% |
| Grinding and cutting wheels | 6804, Sch II S. No. 220 | 18% |
| Ferrous scrap and offcuts | 7204, Sch II S. No. 263 | 18% |
| Job work on a client's steel | 9988, Notif 11/2017 S. No. 26(iv) | 18% |
| Supply-and-fix job on a building (works contract) | 9954, Notif 11/2017 S. No. 3(xii) | 18% |
Source: Notification 9/2025-Central Tax (Rate), Schedule II (9% CGST), in force 22 September 2025, as amended up to 01/2026-CT(Rate); Notification 11/2017-Central Tax (Rate), S. No. 26 as substituted by Notification 15/2025-CT(Rate), and S. No. 3(xii)
One detail in the 7308 entry: it excludes prefabricated buildings of heading 9406 and transmission towers. If you supply either, check the classification with your CA before you bill.
Is your job a sale, a works contract or job work?
Three questions sort almost every order:
Sale of goods. A builder collects 40 window grills from your yard and fixes them with their own crew. You sell goods under heading 7308.
Works contract. A homeowner orders a main gate that you fabricate, carry to site and fix to the compound wall. Section 2(119) of the CGST Act defines a works contract as a contract for "fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance" and similar work on immovable property, where goods pass to the customer during the work. Paragraph 6(a) of Schedule II treats it as a supply of services. Repairing a shed or re-welding a fixed staircase railing falls here too.
Here's a worked bill for that gate:
| Line | Value |
|---|---|
| MS gate, 450 kg at Rs 140 per kg | Rs 63,000 |
| Fixing, primer and painting at site | Rs 7,000 |
| Taxable value | Rs 70,000 |
| CGST at 9% | Rs 6,300 |
| SGST at 9% | Rs 6,300 |
| Invoice total | Rs 82,600 |
Prices are illustrative. Because the steel and the works contract are both 18%, the tax doesn't change if you split the lines or bill a lump sum. The gate itself is worth more than Rs 50,000, so generate Part A of the e-way bill before it leaves your workshop (Rule 138(1), CGST Rules).
Job work. A factory sends you its own steel and pays you a labour charge to cut, weld and return the frames. You never own the steel, so you bill only your service, at 18% under S. No. 26(iv) of Notification 11/2017-Central Tax (Rate) as substituted by Notification 15/2025. Say the factory sends 2,000 kg and you charge Rs 18 per kg: Rs 36,000 plus Rs 6,480 GST, Rs 42,480 in all. The factory can send that steel to you without paying tax under Section 143 of the CGST Act, but it must bring the finished goods back within one year (three years for capital goods). Our job work guide covers the challan rules.
Business clients and ITC. Section 17(5)(c) and (d) of the CGST Act block credit on works contracts and on goods and services a business uses to construct immovable property on its own account. So a shop owner who capitalises a new rolling shutter generally can't claim your 18%. There's one exception that matters for fabricators: "plant and machinery" is outside the block, and its definition includes foundations and structural supports for machinery. A steel platform that holds a factory's machine can carry credit. A factory shed can't, because buildings and other civil structures are excluded from "plant and machinery". Tell clients which one they're buying before you quote. Our works contract GST guide has more on the block.
How are scrap and offcuts taxed?
Every welding shop produces scrap, and since 10 October 2024 there are three separate rules to track.
- Buying scrap from an unregistered seller: reverse charge. If you're registered and buy metal scrap (Chapters 72 to 81) from an unregistered kabadiwala, you pay the GST yourself under reverse charge (Notification 4/2017-Central Tax (Rate), S. No. 8, inserted by Notification 6/2024-Central Tax (Rate)). For ferrous scrap that's 18%, and you can take it back as ITC if you use the scrap in your business.
- Selling scrap to a registered dealer: GST TDS. Notification 25/2024-Central Tax added any registered person receiving metal scrap from another registered person to the list of deductors under Section 51 of the CGST Act. The buyer deducts 1% CGST plus 1% SGST, but only where the total value of supply under a contract exceeds Rs 2,50,000, excluding GST. Selling 1,500 kg of offcuts at Rs 35 per kg is Rs 52,500 plus Rs 9,450 GST, well under the limit, so no deduction. A yearly contract above Rs 2.5 lakh is different. Accept the credit on the portal so it reaches your electronic cash ledger.
- Selling scrap: income tax TCS. If you're a firm or company, or an individual or HUF whose business turnover last year was above Rs 1 crore, you're a "seller" and must collect TCS from the scrap buyer. The rate was 1% for FY 2025-26 (Section 206C(1), Income-tax Act 1961) and is 2% from 1 April 2026 (Section 394(1), Table S. No. 4, Income-tax Act 2025, as amended by the Finance Act 2026). A resident buyer who gives you a written declaration that the scrap will be used for manufacturing, and not for trading, is excluded.
Scrap generated while you do job work belongs to the job work arrangement. Section 143(5) lets a registered job worker sell it directly on payment of tax. If you're not registered, the principal sells it.
When do you need GST registration, and does composition make sense?
The basic limit is Rs 20 lakh of aggregate turnover in a financial year, or Rs 10 lakh in a special category State that hasn't raised it (Section 22(1), CGST Act). The Rs 40 lakh limit in Notification 10/2019-Central Tax is only for suppliers of goods alone, and Telangana is among the States that didn't adopt it. Job work and site jobs are services, so most fabricators work to Rs 20 lakh. Our GST registration service handles the application, and our Rs 20 lakh vs Rs 40 lakh guide covers the edge cases.
Composition has two routes, and a mixed workshop fits them badly.
- Section 10(1), 1% of turnover. Cutting and welding sections into a gate turns inputs into a new product, which fits "manufacture" in Section 2(72) of the CGST Act. A manufacturer with previous-year turnover up to Rs 1.5 crore (Notification 14/2019-Central Tax) can pay 0.5% CGST plus 0.5% SGST. But the second proviso to Section 10(1) caps services at 10% of last year's turnover or Rs 5 lakh, whichever is higher. Job work and fixing jobs are both services, so a workshop that does much of either breaks the condition.
- Section 10(2A), 6% of turnover. A registered person who can't use Section 10(1), with previous-year turnover within Rs 50 lakh, pays 3% CGST plus 3% SGST.
Neither route allows inter-State supplies, ITC or charging GST on the bill. Factories and builders want an 18% invoice they can claim. If they're most of your customers, composition costs you work. Our composition scheme guide has the full conditions.
Step-by-Step Guide
Monthly GST Routine for a Fabrication Workshop
Tag every bill
Sale of goods (7308, 7314, 7326, 9403), supply-and-fix works contract (9954) or job work on a client's steel (9988). All are 18%, but the tag decides your registration limit, composition and the TDS you expect.
Track job work challans
Log the steel each client sends and the date. Finished goods must go back within one year under Section 143, or the principal faces tax on that steel.
Pay reverse charge on unregistered scrap
Scrap bought from an unregistered seller goes into GSTR-3B under reverse charge at 18%, then back as ITC.
Generate e-way bills
Any consignment above Rs 50,000, including steel from your supplier and gates going to site, needs Part A of EWB-01 before it moves (Rule 138(1), CGST Rules).
Match ITC and accept GST TDS
Check steel, electrode and gas invoices against GSTR-2B. Accept any Section 51 credit from scrap buyers or government jobs, then file GSTR-1 and GSTR-3B.
Source: Sections 2(72), 2(119), 10, 17(5), 22, 51 and 143 and Schedule II para 6(a), CGST Act; Rule 138, CGST Rules; Notifications 9/2025, 11/2017, 15/2025, 4/2017 and 6/2024-CT(Rate); 10/2019, 14/2019 and 25/2024-CT
Our GST return filing service runs this routine every month.
How is a fabrication workshop's income taxed?
Presumptive tax under Section 44AD. A resident individual, HUF or partnership firm (not an LLP) can declare 6% of receipts through banking or online channels and 8% of the rest as profit, if turnover is up to Rs 2 crore, or Rs 3 crore where cash receipts are within 5% (Section 44AD, Income-tax Act 1961). From tax year 2026-27 the same scheme is Section 58(2), Table S. No. 1, of the Income-tax Act 2025. If your books show a higher profit, you declare that instead. Our Section 44AD guide covers the conditions.
Example: a proprietor with Rs 1.8 crore turnover for FY 2025-26, Rs 6 lakh of it in cash.
- Cash is 3.3% of turnover, under 5%, and turnover is under Rs 2 crore anyway, so 44AD is open.
- Deemed profit: 6% of Rs 1,74,00,000 (Rs 10,44,000) plus 8% of Rs 6,00,000 (Rs 48,000), so Rs 10,92,000.
- Tax under the new regime: Rs 20,000 (Rs 4-8 lakh at 5%) plus Rs 29,200 (Rs 2,92,000 at 10%), so Rs 49,200.
- Income is within Rs 12 lakh, so the Section 87A rebate of up to Rs 60,000 wipes out the Rs 49,200. Tax payable is nil, if this is the only income, but the return still has to be filed.
If you declare under 44AD this year and a lower profit in any of the next five years, Section 44AD(4) bars the scheme for the following five years. Our ITR filing service prepares the return under 44AD or on audited books.
What TDS applies to a fabricator?
On job work and site contracts (Section 194C). A firm, company, government body, or an individual or HUF whose business turnover last year was above Rs 1 crore, paying you for work under a contract, deducts 1% if you're an individual or HUF and 2% if you're a firm or company. The limits are Rs 30,000 for a single bill or Rs 1 lakh for the year (Section 194C(1) and (5)). On the Rs 36,000 job work bill above, a company client deducts 1% of Rs 36,000, which is Rs 360, from a proprietor.
Not on products made from your own steel. Explanation (iv)(e) to Section 194C counts as "work" a product made to the customer's specification from material bought from that customer. It excludes a product made from material bought from someone else. So job work on a factory's steel is "work", while grills you make from steel you bought and sell without fixing are not. Check Form 26AS each quarter and claim every deduction in your return. Our Section 194C guide covers the details.
Homeowners paying for their own house are outside Section 194C under sub-section (4).
From 1 April 2026 contractor TDS moves to Section 393(1), Table S. No. 6(i), of the Income-tax Act 2025, and the definition of "work", with the same exclusion, sits in Section 402(47)(e). Our TDS filing service handles the quarterly returns if you deduct TDS on your own subcontractors.
Common mistakes fabrication workshops make
- Billing job work as a sale of steel. If the client supplied the steel, you charge 18% on your labour only, and the client's challan has to match.
- Opting for 1% composition while doing job work. Job work and fixing jobs are services. Above 10% of last year's turnover or Rs 5 lakh, Section 10(1) is closed.
- Ignoring reverse charge on scrap from kabadiwalas. Since 10 October 2024, a registered buyer pays 18% GST on unregistered metal scrap.
- Forgetting TCS on scrap sales. A firm, or a proprietor above Rs 1 crore last year, collects 2% from 1 April 2026 unless the buyer gives a manufacturing declaration.
- Promising ITC on sheds. A factory shed is a building, so its owner can't claim your GST. A machine support structure can be different.
How Tax Garden helps fabrication workshops
We tag your counter sales, site jobs, job work and scrap correctly, file GSTR-1 and GSTR-3B with reverse charge and ITC handled through our GST return filing service, and keep books through our accounting and bookkeeping service that support 44AD or an audit. We also file your ITR and quarterly TDS and TCS returns. If you buy steel in bulk from a dealer, our cement and steel dealers' guide shows how your supplier bills you. Call or WhatsApp us on 9640290977.
