GST on Scrap from 1 November 2026: RCM, TDS and Registration

From 1 November 2026, four more kinds of waste follow the GST rules that metal scrap has followed since October 2024: used cooking oil, plastic scrap, tyre scrap and electronic waste. A registered business buying these from an unregistered seller now pays the GST itself under reverse charge, a registered buyer purchasing from a registered seller must deduct GST TDS, and sellers of these goods can no longer rely on the special registration exemption.

The changes came through three notifications dated 27 October 2026, issued after the 57th GST Council meeting. Recyclers, oil collectors, tyre retreaders, e-waste processors and the many small scrap traders around Agra and other industrial towns are the ones most affected.

Which goods and notifications are covered?

Goods	Customs Tariff heading	Reverse charge (from unregistered seller)	GST TDS (between registered persons)
Used cooking oil	1518	New from 1 Nov 2026	New from 1 Nov 2026
Waste and scrap of plastics	3915	New from 1 Nov 2026	New from 1 Nov 2026
Waste and scrap of tyres	4004	New from 1 Nov 2026	New from 1 Nov 2026
Electrical and electronics waste and scrap	8549	New from 1 Nov 2026	New from 1 Nov 2026
Metal scrap	Chapters 72 to 81	Already applied	Already applied

The three notifications are:

• Notification 04/2026-Central Tax (Rate) adds the four new items to the reverse charge list in Notification 4/2017-Central Tax (Rate), where the supplier is any unregistered person and the recipient is any registered person.
• Notification 06/2026-Central Tax rewrites the proviso to Notification 5/2017-Central Tax, so persons supplying any of the five categories cannot use that registration exemption.
• Notification 07/2026-Central Tax amends Notification 50/2018-Central Tax so that a registered person receiving any of the five categories from another registered person becomes a TDS deductor under section 51 of the CGST Act.

Matching integrated tax and union territory tax notifications were issued for reverse charge, so inter-state purchases are covered too. Classification decides everything here: material that is still a usable product, or that falls under a different heading, is outside these entries.

What does reverse charge on scrap mean for the buyer?

When a registered business buys any of these goods from an unregistered person, such as a local kabadi collector or a household, the seller charges no GST. The buyer becomes liable to pay it. In practice the buyer has to:

1. Issue a self-invoice for the purchase, since the seller cannot issue a tax invoice.
2. Issue a payment voucher when paying the seller.
3. Report the tax in GSTR-3B (the inward supplies liable to reverse charge row) for the month of purchase.
4. Pay that tax in cash through the electronic cash ledger. Input tax credit cannot be used to pay reverse charge tax.
5. Claim input tax credit of the same amount, if the goods are used in the business and the usual conditions are met.

Because the tax is paid in cash first and the credit comes back later, a buyer with large monthly purchases needs extra working capital for that gap.

When does a buyer deduct GST TDS on scrap?

If both the buyer and the seller are registered, there is no reverse charge. Instead, section 51 of the CGST Act now applies to the buyer.

Point	Rule
Who deducts	A registered person receiving any of the five goods from a registered supplier
When	Contract value exceeds the threshold limit of ₹2,50,000
Value	Excluding CGST, SGST, IGST and cess shown on the invoice
Rate	1% CGST and 1% SGST, so 2% in all for an intra-state purchase
Deposit	Within 10 days after the end of the month of deduction
Return	GSTR-7, monthly
Supplier's credit	Shows in the supplier's electronic cash ledger once GSTR-7 is filed

The threshold is tested on the contract, not on each invoice, so splitting one arrangement into several small orders does not take it out of TDS. No deduction is needed where the supplier's location and the place of supply are both in a state other than the buyer's state of registration.

A deductor needs a separate GST registration for TDS in Form GST REG-07, even if it already holds a normal GSTIN. A GSTN advisory of early November 2026 explains that applicants from these trades should choose "Others" under constitution of business in Part B of the form and type their category, for example "Plastic Scrap Dealers".

Does the scrap seller now need GST registration?

Notification 5/2017-Central Tax exempts a person from registration if all of their supplies are taxed under reverse charge. That exemption is now withdrawn for suppliers of the five categories. It does not mean every small collector must register at once. The seller still checks the normal tests: the turnover threshold in section 22 and the compulsory registration cases in section 24, such as inter-state supply. A collector whose turnover crosses the limit can no longer stay out of GST simply because the buyer pays the tax.

For a seller who does register, the buyer will deduct TDS on large contracts, and that amount becomes usable in the seller's cash ledger. See our GST registration service for the documents and process.

Common mistakes buyers and sellers make with scrap GST

The metal scrap rules have been in place for two years, and the same errors tend to repeat whenever a new item is added:

• Wrong heading. Bills say "waste" or "scrap" without checking the tariff heading, so reverse charge is missed on some purchases and wrongly applied to others.
• No self-invoice. Buyers pay the seller in cash and record only a purchase voucher. Without a self-invoice, the input tax credit is open to question.
• Paying reverse charge tax from ITC. The portal blocks it, but some returns are prepared on that assumption and then fall short of cash on the due date.
• Missing the TDS registration. Businesses already registered under GST assume their GSTIN covers TDS and only learn otherwise when a notice arrives for not filing GSTR-7.
• Testing the threshold per invoice. Officers look at the contract or running arrangement with each supplier, not at single bills.
• Not checking the supplier's status. Whether the seller is registered decides between reverse charge and TDS, so GSTINs should be checked on the portal before each new supplier is added.

Officers in scrap cases also tend to ask for weighbridge slips, transport details and proof of payment, so keep those with each purchase file.

Getting your scrap purchases GST-ready

If your business buys or sells plastic, tyre, metal or e-waste scrap, or used cooking oil, set up self-invoicing, the reverse charge entries and the TDS registration before the November 2026 returns fall due. Our team handles GST returns and compliance, including GSTR-3B reverse charge reporting and monthly GSTR-7 filing, for businesses in Agra and across India.