What changed on 1 November 2026

From 1 November 2026, four new waste and scrap items join metal scrap under a common GST framework: used cooking oil (HSN 1518), plastic waste and scrap (HSN 3915), tyre waste and scrap (HSN 4004) and electrical and electronic waste and scrap (HSN 8549).

The framework has three parts. A registered buyer pays GST under reverse charge when buying these goods from an unregistered seller. A registered buyer deducts 2% GST TDS under Section 51 when buying from a registered seller. And sellers of these goods lose the registration exemption available to persons whose supplies are wholly under reverse charge.

The changes follow the recommendations of the 57th GST Council meeting held on 8 October 2026. The aim is the same as it was for metal scrap in 2024: to stop fake input tax credit in the scrap trade and bring the recycling chain into the tax net.

Notifications at a glance

All three notifications are dated 27 October 2026 and take effect from 1 November 2026.

• Notification 04/2026-Central Tax (Rate), with matching IGST and UTGST rate notifications, amends 4/2017-CT(R), the RCM-on-goods list. It inserts S. No. 2A for used cooking oil (1518), 3B for plastic waste (3915), 3C for tyre waste (4004) and 9 for e-waste (8549). Supplier: any unregistered person. Recipient: any registered person.
• Notification 06/2026-Central Tax amends 5/2017-CT, the registration exemption under Section 23(2). Suppliers of the four new items and of metal scrap can no longer claim the exemption meant for persons making only reverse-charge supplies.
• Notification 07/2026-Central Tax amends clause (d) of 50/2018-CT, which lists TDS deductors. It substitutes clause (d) so that any registered person receiving the five notified goods from another registered person must deduct TDS under Section 51.

For background, metal scrap (Chapters 72 to 81) came under RCM from 10 October 2024 as S. No. 8 of the RCM list, and under TDS through Notification 25/2024-Central Tax dated 9 October 2024. GSTN issued an advisory on 1 November 2026 on TDS registration for the new categories.

Covered goods and HSN codes

The four new items plus metal scrap form the full list of five. Classification follows the First Schedule to the Customs Tariff Act, 1975.

• Used cooking oil — Heading 1518. RCM applies under S. No. 2A; TDS applies. New from 1 November 2026.
• Waste and scrap of plastics — Heading 3915. RCM applies under S. No. 3B; TDS applies. New from 1 November 2026.
• Waste and scrap of tyres — Heading 4004. RCM applies under S. No. 3C; TDS applies. New from 1 November 2026.
• Electrical and electronics waste and scrap, including battery scrap classified here — Heading 8549. RCM applies under S. No. 9; TDS applies. New from 1 November 2026.
• Metal scrap — iron, steel, copper, aluminium, nickel, zinc, lead, tin and others, Chapters 72 to 81. RCM applies under S. No. 8; TDS applies. In force since 10 October 2024.

Classification is the gatekeeper. The rules apply only if the goods actually fall in these headings. Rejected finished goods, or used tyres sold for reuse rather than as scrap, may sit under a different heading and fall outside this framework. Check the 8-digit tariff item before tagging a vendor or a ledger.

Reverse charge does not change the rate. The GST rate is still the one notified for that HSN. Commonly applied rates are 18% for metal scrap and e-waste, and 5% for plastic and tyre scrap, but confirm the current rate for your 8-digit code before booking.

The one question that decides the treatment

For a registered buyer, the first and only sorting question is this: is the seller registered on the date of supply?

• Unregistered seller, registered buyer. Reverse charge applies under Section 9(3), or Section 5(3) of the IGST Act. The buyer pays the GST in cash and reports it in GSTR-3B Table 3.1(d).
• Registered seller, registered buyer. Forward charge applies, plus 2% TDS under Section 51 if the conditions are met. The seller charges GST on the invoice and the buyer withholds 2%. The seller files GSTR-1 and GSTR-3B; the buyer files GSTR-7.
• Any seller, unregistered buyer such as a consumer. Neither reverse charge nor TDS applies. The seller pays GST if registered, through its normal returns.

Reverse charge and TDS never apply to the same purchase. TDS is not deducted on a purchase from an unregistered seller, and reverse charge does not arise on a purchase from a registered seller. Verify the seller's GSTIN on the portal on the date of each supply, since a small seller may register mid-year.

Reverse charge: unregistered seller to registered buyer

When a registered person buys any of the five items from an unregistered person, the buyer pays the GST. This holds even if the seller's turnover is below the registration threshold, and there is no minimum value.

Step by step for the buyer

1. Confirm the HSN of the goods falls in 1518, 3915, 4004, 8549 or Chapters 72 to 81.
2. Confirm the seller is unregistered on the date of supply, with no valid GSTIN. Keep the seller's PAN or Aadhaar, address and a declaration on file.
3. Issue a self-invoice under Section 31(3)(f) on receipt of the goods, showing the HSN, quantity, value, rate and tax, marked "tax payable on reverse charge".
4. Issue a payment voucher under Section 31(3)(g) when you pay the seller.
5. Work out the time of supply under Section 12(3): the earliest of receipt of goods, date of payment, or 31 days after the seller's bill.
6. Pay the tax in cash through the electronic cash ledger. Reverse-charge liability cannot be set off against input tax credit.
7. Report it in GSTR-3B Table 3.1(d), inward supplies liable to reverse charge. Do not show the self-invoice as a sale in GSTR-1.
8. Claim ITC in Table 4A(3) of GSTR-3B in the same month or a later one, if the goods are used for taxable business supplies.

An intra-state purchase attracts CGST and SGST; an inter-state purchase attracts IGST.

Worked example 1: plastic scrap from a kabadiwala

Shree Polymers, a registered plastic recycler in Howrah, West Bengal, buys 4,000 kg of PET bottle scrap (HSN 3915) at ₹30 per kg from Raju, an unregistered local collector, on 3 November 2026. A 5% rate is assumed for illustration.

• Value of scrap, 4,000 kg at ₹30: ₹1,20,000
• CGST at 2.5% under reverse charge: ₹3,000
• SGST at 2.5% under reverse charge: ₹3,000
• Paid to Raju: ₹1,20,000
• Paid to the government in cash by Shree Polymers: ₹6,000

Shree Polymers raises a self-invoice dated 3 November, pays ₹6,000 in cash with the November GSTR-3B due on 20 December 2026, reports it in Table 3.1(d), and claims ₹6,000 as ITC in Table 4A(3). Raju collects only ₹1,20,000 and charges no GST. No TDS arises, because Raju is unregistered.

Worked example 2: e-waste bought inter-state

A registered e-waste recycler in Kolkata buys discarded circuit boards and battery scrap (HSN 8549) worth ₹80,000 from an unregistered dealer in Jharkhand. At an assumed 18%, the recycler pays IGST of ₹14,400 under reverse charge in cash, and claims it as input tax credit.

TDS under Section 51: registered seller to registered buyer

When a registered person buys any of the five items from another registered person, the buyer deducts TDS at 2% of the taxable value, excluding GST, while paying the seller. The seller still charges full GST on its invoice. TDS is a withholding, not an extra tax.

When TDS applies

All four conditions must be met:

1. The goods fall in one of the five notified HSN categories.
2. Both buyer and seller are registered.
3. The total taxable value under the contract exceeds ₹2,50,000, excluding GST and cess. This is a contract test, not a per-invoice test, so several small invoices under one order count together.
4. The place-of-supply proviso does not exclude it. No TDS is deducted where the seller's location and the place of supply are both in a state other than the buyer's state of registration.

The 2% splits as follows: an intra-state supply attracts 1% CGST plus 1% SGST or UTGST; an inter-state supply attracts 2% IGST.

Step by step for the buyer as deductor

1. Get a separate TDS registration in Form GST REG-07, even if you already hold a regular GSTIN. Per the GSTN advisory of 1 November 2026, select "Others" under Constitution of Business in Part B, Table 2, and enter your category, for example "Waste and Scrap of Plastics Dealers" or "Electrical and Electronics Waste and Scrap Dealers". For metal, it is "Metal Scrap Dealers".
2. Deduct 2% on the taxable value when payment is made or credited to the seller.
3. Deposit the TDS and file GSTR-7 by the 10th of the following month, under the TDS GSTIN.
4. Make the TDS certificate in GSTR-7A available to the seller. It is generated on the portal once GSTR-7 is filed.
5. The seller accepts the credit on the portal, after which it reaches the seller's electronic cash ledger under Section 51(5).

Delay attracts interest under Section 50. Failure to deduct or deposit attracts penalty under Section 122(1)(v) and recovery under Section 51(6) and (7).

Worked example 3: metal scrap, intra-state

A registered steel foundry in Howrah signs a contract with a registered scrap trader in Kolkata for 10 tonnes of HMS iron scrap (Chapter 72) at ₹30,000 per tonne. Delivery and invoice are dated 4 November 2026, at 18%.

• Taxable value, 10 tonnes at ₹30,000: ₹3,00,000
• CGST at 9% charged by the seller: ₹27,000
• SGST at 9% charged by the seller: ₹27,000
• Invoice total: ₹3,54,000
• TDS, CGST at 1% on ₹3,00,000: ₹3,000
• TDS, SGST at 1% on ₹3,00,000: ₹3,000
• Net paid to the seller: ₹3,48,000
• Deposited by the foundry through GSTR-7 by 10 December 2026: ₹6,000

The contract value of ₹3,00,000 exceeds ₹2,50,000, so TDS applies. The foundry claims full input tax credit of ₹54,000 on the seller's invoice, subject to the invoice appearing in GSTR-2B. The seller pays its ₹54,000 output tax normally and uses the ₹6,000 TDS credit sitting in its cash ledger.

Worked example 4: below the threshold

The same foundry places a one-off order for tyre scrap (HSN 4004) worth ₹1,80,000 with a registered dealer. The contract value is under ₹2,50,000, so no TDS applies. The seller charges GST on its invoice and the buyer pays it in full.

Worked example 5: inter-state used cooking oil

A registered biodiesel plant in West Bengal buys used cooking oil (HSN 1518) worth ₹6,00,000 under a contract from a registered aggregator in Odisha, with the goods delivered in West Bengal. The place of supply is West Bengal, the buyer's own state, so the proviso does not block TDS. The plant deducts 2% IGST of ₹12,000 and deposits it through GSTR-7.

Registration changes for sellers

Before 1 November 2026, a seller whose entire supplies were taxable under reverse charge could stay unregistered under Notification 5/2017-CT, even above the threshold. Notification 06/2026-CT removes that option for sellers of all five items.

• Turnover below the Section 22 threshold, with no Section 24 trigger. No registration is needed. Registered buyers pay GST under reverse charge.
• Turnover crosses the threshold. The seller must register within 30 days. After registration it sells under forward charge, and its B2B sales may suffer 2% TDS.

This does not mean every small kabadiwala must register at once. The threshold test still applies; only the reverse-charge-based exemption is gone.

Common mistakes to avoid

• Applying TDS on a purchase from an unregistered seller, where reverse charge applies instead.
• Paying reverse-charge tax through the credit ledger instead of in cash.
• Testing the ₹2.5 lakh limit per invoice instead of per contract, or including GST in that value.
• Deducting TDS on the GST-inclusive amount instead of the taxable value.
• Assuming reverse charge means 18%, when the rate follows the HSN.
• Filing GSTR-7 under the regular GSTIN instead of a separate TDS GSTIN.
• Reporting the reverse-charge self-invoice as an outward sale in GSTR-1.

Compliance checklist

For registered buyers

• Map every scrap and waste vendor as registered or unregistered, and verify their GSTINs.
• Tag purchase ledgers by HSN: 1518, 3915, 4004, 8549 and Chapters 72 to 81.
• Set up self-invoice and payment voucher series for reverse-charge purchases.
• Configure your ERP to flag contracts with registered sellers above ₹2,50,000.
• Apply for TDS registration in REG-07 if any such contract exists.
• Diary the dates: GSTR-7 by the 10th, GSTR-3B by the 20th.
• Reconcile TDS deducted against GSTR-7A and supplier ledgers each month.

For sellers

• Track aggregate turnover against the threshold, and register within 30 days of crossing it.
• Once registered, accept TDS credits on the portal each month.
• Reconcile buyer payments, net of TDS, against your receivables.

Frequently asked questions

Does reverse charge apply if the unregistered seller is below the threshold? Yes. The registered buyer pays GST regardless of the seller's turnover.

Is there any minimum value for reverse charge? No. Even a small purchase of notified scrap from an unregistered seller attracts it.

Can reverse charge and TDS both apply to one purchase? No. Reverse charge is for unregistered sellers, TDS for registered sellers.

Is input tax credit available? Yes, both on reverse-charge tax paid and on the GST charged on a seller's invoice, subject to the normal conditions in Sections 16 and 17.

Do I need a new TDS registration if I already have one for metal scrap? No. An existing valid TDS GSTIN covers further deductions.

Does buying only from unregistered sellers require TDS registration? No. Reverse-charge purchases alone do not trigger it.

This article is general information based on the notifications as published. Please check the notification text, your goods' exact classification and rate, and the facts of each transaction before acting. We are happy to look at your position.

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