GST on Waste and Scrap from 1 November 2026: Reverse Charge, TDS and No Registration Exemption

The short answer

From 1 November 2026, three notifications issued on 27 October 2026 change how GST works on five kinds of waste and scrap:

• used cooking oil (heading 1518);
• plastic waste and scrap (heading 3915);
• tyre waste and scrap (heading 4004);
• metal scrap (Chapters 72 to 81);
• electrical and electronic waste and scrap (heading 8549).

Who pays the tax now depends on whether the seller is registered:

1. Reverse charge when you buy from an unregistered seller

Notification No. 04/2026-Central Tax (Rate) amends Notification 4/2017-CT(R), issued under section 9(3) of the CGST Act. Notification 04/2026-Integrated Tax (Rate) makes the same change for inter-State supplies. Four new entries are added, each with "any unregistered person" as the supplier and "any registered person" as the recipient:

• S. No. 2A: used cooking oil (1518);
• S. No. 3B: waste and scrap of plastics (3915);
• S. No. 3C: waste and scrap of tyres (4004);
• S. No. 9: electrical and electronics waste and scrap (8549).

So a registered recycler, aggregator or manufacturer buying any of these from an unregistered kabadiwala, collector or household pays the GST itself under reverse charge. It raises a self-invoice, reports the tax in GSTR-3B, pays it in cash, and can then take ITC on it subject to the usual conditions.

Metal scrap is not among the four new entries. The amendment inserts rows after an existing S. No. 3A, and does not itself show what that row covers. Check the consolidated Notification 4/2017-CT(R) for the current metal-scrap entry before treating a purchase as forward or reverse charge.

2. TDS when both sides are registered

Notification No. 07/2026-Central Tax substitutes clause (d) of Notification 50/2018-CT, issued under section 51. From 1 November 2026, the persons required to deduct tax at source include:

any registered person receiving supply of any of the following goods from another registered person: used cooking oil (1518); waste and scrap of plastics (3915); waste and scrap of tyres (4004); metal scrap (Chapters 72 to 81); electrical and electronics waste and scrap (8549).

In practice, a registered buyer of these goods from a registered seller:

• pays the seller net of the TDS, subject to the conditions in section 51;
• must hold a GST registration as a tax deductor (persons required to deduct tax under section 51 must register, whatever their turnover);
• files the TDS return in GSTR-7 and issues the certificate in GSTR-7A. From 1 January 2027, Notification 05/2026-CT changes GSTR-7A Table 7 to show invoice or document details (number, date, value), the amount paid, and the tax deducted head-wise.

The tax deducted is credited to the seller's electronic cash ledger under section 51, so the seller still receives the full amount, partly in cash and partly as a ledger credit.

3. No registration exemption for these sellers

Section 23(2) lets the Government exempt categories of persons from registration, and Notification 5/2017-CT is one such exemption. Notification No. 06/2026-Central Tax substitutes its proviso. From 1 November 2026, nothing in that notification applies to any person engaged in the supply of the five categories of goods above.

A scrap dealer whose turnover crosses the threshold in section 22 therefore cannot stay unregistered by relying on that notification. If the dealer registers, sales to registered buyers then fall under row 2 of the table (forward charge plus TDS) rather than reverse charge.

Who is affected

• Recyclers and reprocessors of plastic, tyres, metals and e-waste, and biodiesel or oleochemical units buying used cooking oil;
• Manufacturers selling production scrap to registered dealers: buyers will now deduct TDS from your payments;
• Scrap aggregators who buy from unregistered collectors and sell to registered recyclers: you may pay reverse charge on purchases and suffer TDS on sales;
• Restaurants, hotels and caterers selling used cooking oil to registered collectors, where the TDS row applies if both are registered.

What to do before 1 November 2026

• Map your vendors for each of the five categories: registered or not. That decides reverse charge or TDS.
• Buyers: take a TDS registration if you do not have one, and configure your ERP for RCM self-invoices and TDS deduction on these HSN codes.
• Sellers: expect payments net of TDS. Reconcile TDS credits monthly, so the cash-ledger credit is not missed.
• Classification matters: the rows apply by tariff heading. Check that what you buy or sell is waste and scrap under the heading named, and not a new or refurbished product.

Related: our 57th GST Council overview.

Sources: Notification No. 04/2026-Central Tax (Rate) and No. 04/2026-Integrated Tax (Rate), and Notifications No. 06/2026-Central Tax and No. 07/2026-Central Tax, all dated 27 October 2026; Notification No. 05/2026-Central Tax dated 26 October 2026 (FORM GSTR-7A). Read from the copies on CBIC's Tax Information Portal. Effective dates are as stated in each notification. This article explains the changes; it is not legal advice on a particular case.