Plastic, tyre and e-waste scrap and used cooking oil: reverse charge, registration and TDS under GST from 1 November 2026

Three notifications dated 27 October 2026 bring four more kinds of goods into the regime that has applied to metal scrap: used cooking oil, waste and scrap of plastics, waste and scrap of tyres, and electrical and electronics waste and scrap. All three take effect from 1 November 2026, and each deals with a different side of the same purchase:

• Notification No. 04/2026-Central Tax (Rate) puts the tax on reverse charge when an unregistered person supplies these goods to a registered person;
• Notification No. 06/2026-Central Tax takes suppliers of these goods, and of metal scrap, out of the registration exemption for persons whose supplies are wholly on reverse charge; and
• Notification No. 07/2026-Central Tax makes a registered buyer deduct tax at source when it buys any of the five from a registered supplier.

The GST Council recommended the measure at its 57th meeting on 8 October 2026. The notifications give it legal effect from 1 November 2026.

The goods covered

The goods are identified by their headings in the First Schedule to the Customs Tariff Act, 1975:

Metal scrap appears only in the registration and TDS notifications. The reverse charge notification adds the other four, because metal scrap is already on that list. Each regime turns on these headings. Goods made from recycled material are not scrap merely because of their origin, and the heading on the supplier’s invoice should be checked before either regime is applied.

Reverse charge on purchases from unregistered suppliers

Notification No. 04/2026-Central Tax (Rate) is issued under section 9(3) of the Central Goods and Services Tax Act, 2017 (CGST Act). It amends the Table to Notification No. 4/2017-Central Tax (Rate) dated 28 June 2017, inserting S. No. 2A for used cooking oil, S. Nos. 3B and 3C for plastic and tyre scrap, and S. No. 9 for electrical and electronics waste and scrap. In each new entry the supplier is “any unregistered person” and the recipient is “any registered person”.

Section 9(3) then does the rest: the recipient pays the tax, and the Act applies to the recipient as if it were the person liable to pay tax on the supply. The notification moves the liability; it does not set a rate. Tax is paid at the rate that already applies to the goods.

Two obligations follow under section 31(3) of the CGST Act. The recipient issues an invoice itself for goods received from the unregistered supplier (clause (f)), and a payment voucher when it pays the supplier (clause (g)). A biodiesel unit buying used cooking oil from restaurants, or a recycler buying plastic waste from collectors, will be raising these documents on every such purchase from November.

The supplier’s turnover does not matter to the recipient’s liability. A collector far below the registration threshold is still an unregistered person, and the registered buyer pays the tax.

Registration exemption withdrawn for suppliers

Notification No. 5/2017-Central Tax dated 19 June 2017, issued under section 23(2) of the CGST Act, exempts from registration persons who are only engaged in making supplies on which the whole of the tax is payable by the recipient on reverse charge under section 9(3).

Without more, that exemption would let a large scrap supplier stay unregistered for good, since everything it sells to registered buyers is on reverse charge. Notification No. 06/2026-Central Tax closes that route. It substitutes the proviso to Notification No. 5/2017-Central Tax so that the exemption does not apply to any person engaged in the supply of any of the five goods in the table above.

The result is that a supplier of these goods registers on the ordinary rules: once its aggregate turnover in a financial year crosses the threshold under section 22 of the CGST Act. A small collector below the threshold stays unregistered, and the buyer pays under reverse charge. A dealer above it must register, charge tax on its invoices, and from then on sells under forward charge.

Scrap dealers who have relied on the exemption should work out their aggregate turnover for the year now, because the exemption ends on 1 November 2026.

Tax deduction at source on purchases from registered suppliers

Notification No. 07/2026-Central Tax is issued under section 1(3) read with section 51 of the CGST Act. It substitutes clause (d) of Notification No. 50/2018-Central Tax dated 13 September 2018. The new clause (d) names “any registered person receiving supply of any of the following goods from another registered person”, followed by the same five goods.

Section 51 sets the terms of the deduction:

• Rate: one per cent under the CGST Act, deducted from the payment made or credited to the supplier.
• Threshold: only where the total value of the supply under a contract exceeds two lakh and fifty thousand rupees.
• Value: the amount excluding central tax, State tax, Union territory tax, integrated tax and cess shown in the invoice.
• Location proviso: no deduction where the location of the supplier and the place of supply are in a State or Union territory different from the State or Union territory of registration of the recipient.
• Deposit: within ten days after the end of the month in which the deduction is made.

The supplier claims the amount deducted in its electronic cash ledger under section 51(5), once it is reflected in the deductor’s return.

The threshold works on the contract, not the invoice. A recycler buying tyre scrap from one dealer against a single annual purchase order will cross it early in the year, even if each invoice is small. Buyers who already deduct on metal scrap have the registration and the process in place. Buyers who deduct for the first time need to be registered as a tax deductor before the first payment after 1 November 2026, and their accounts staff need to know which suppliers’ payments are to be held back.

Which regime applies to which purchase

The three notifications divide every purchase of these goods by a registered person:

• From an unregistered supplier: reverse charge on the buyer under Notification No. 04/2026-Central Tax (Rate). No TDS, as clause (d) applies only to supplies from another registered person.
• From a registered supplier, contract value above the threshold: forward charge by the supplier, and TDS by the buyer.
• From a registered supplier, contract value up to the threshold: forward charge only.

A supplier’s status can change during the year. A collector who crosses the threshold and registers moves the buyer from reverse charge to TDS on that supplier’s later supplies. Buyers should check each supplier’s GSTIN status at the time of purchase and keep the result with the purchase record.

Points to check

The notifications seen here are the Central Tax and Central Tax (Rate) notifications. The State tax share of reverse charge on intra-State supplies, and of TDS, depends on the corresponding State and Union territory notifications, and a buyer should confirm that the State in which it is registered has issued them.

The notifications are silent on goods received before 1 November 2026 but paid for after it. Since section 51 links the deduction to the payment or credit to the supplier, buyers should decide how such payments are to be treated and record the basis.

This article is intended for educational purposes only and should not be construed as professional advice. It is based on the law as understood on the date of publication; laws and regulations are subject to change, and it may not reflect later developments. Readers are advised to consult a qualified tax professional on their specific situation before taking any action based on it. CA. Mohit Gaba takes no responsibility for any action taken or decision made on the basis of this article.