If you run a recycling unit, collect used cooking oil, deal in plastic or tyre scrap, or simply buy scrap as raw material for your factory, your GST paperwork changed on 1 November 2026. According to published reports on the notifications, CBIC issued a set of GST notifications dated 27 October 2026 that bring the scrap trade much more firmly into the GST net.
The good news is that the changes are easy to follow once you break them into three parts: who pays the tax, who must register, and when TDS applies. Let's walk through each one in plain English.
What exactly changed on 1 November 2026?
Three notifications matter most here, as reported:
- Notification 04/2026-Central Tax (Rate): adds new items to the reverse charge list
- Notification 06/2026-Central Tax: removes the registration exemption for scrap suppliers
- Notification 07/2026-Central Tax: brings registered-to-registered scrap deals under GST-TDS (Section 51)
All three are reported to be dated 27 October 2026 and to apply from 1 November 2026.
Which items are covered?
The changes revolve around five categories of goods:
- Used cooking oil (heading 1518)
- Waste and scrap of plastics (3915)
- Waste and scrap of tyres (4004)
- Electrical and electronic waste and scrap, i.e. e-waste (8549)
- Metal scrap (Chapters 72 to 81)
Keep this list handy. As you'll see, metal scrap is treated a little differently from the other four.
Change 1: Reverse charge when you buy from an unregistered seller
Until now, if a small unregistered collector sold you plastic scrap, there was usually no GST on that sale because the seller wasn't in the system.
From 1 November 2026, if a registered business buys used cooking oil, plastic scrap, tyre scrap or e-waste from an unregistered person, the buyer pays the GST under reverse charge (RCM).
In practice this means:
- You work out and pay the GST yourself, through your own return.
- You need proper records of these purchases, such as the date, quantity, value and supplier details.
- Your accounting software should flag these purchases as RCM supplies.
What about metal scrap?
According to the reports, metal scrap is not on the new reverse charge list. So don't assume RCM applies when you buy metal scrap from an unregistered seller. But metal scrap is still covered by the next two changes, so read on.
Change 2: Scrap sellers can no longer stay unregistered
Under the GST law, some small suppliers have been able to stay out of registration through an exemption notification. From 1 November 2026, the reports say that this exemption no longer applies to anyone supplying any of the five categories, including metal scrap.
If your business is collecting and selling scrap, the safest step is to get advice on GST registration now rather than waiting for a notice. For buyers, it also means you should expect, and ask for, GSTINs from your scrap suppliers.
Change 3: GST-TDS on registered-to-registered scrap deals
The third change covers deals where both buyer and seller are registered. In that case, the reports say, the buyer must deduct TDS under Section 51 of the CGST Act when buying any of the five scrap categories.
Section 51 TDS used to be mainly something government departments dealt with. Now ordinary registered businesses buying scrap will need to:
- Deduct the TDS when paying the supplier
- Deposit it and report it in the right GST return
- Make sure the supplier can see and claim the credit
We haven't stated the TDS rate or the return mechanics in this post because we couldn't confirm them from the official notification text. Please check with your tax adviser before you change your payment process.
Quick summary table
| Situation (from 1 Nov 2026) | What happens |
|---|---|
| Registered buyer buys oil, plastic, tyre or e-waste scrap from an unregistered seller | Buyer pays GST under reverse charge |
| Registered buyer buys metal scrap from an unregistered seller | Not on the new RCM list, but the seller should now be registered |
| Person supplying any of the 5 scrap categories | Registration exemption no longer available |
| Registered buyer buys any of the 5 categories from a registered seller | GST-TDS under Section 51 applies |
Who should pay attention?
- Scrap dealers and kabadi networks
- Plastic, tyre and e-waste recyclers
- Used-cooking-oil collectors and biodiesel units
- Metal scrap yards and melting units
- Any manufacturer or trader that buys scrap as an input
A simple 5-step checklist for this week
- List your scrap purchases and sales and match each to the five categories above.
- Check every supplier's GST status. Registered or not, it now changes how you're taxed.
- Update your accounting software with RCM and TDS tax codes for these items.
- Unregistered sellers: speak to a professional about getting registered.
- Keep proper paperwork: invoices, weighment slips and payment proofs for every deal.
Frequently asked questions
From when do these scrap rules apply?
From 1 November 2026, as per the notifications dated 27 October 2026, according to published reports.
I buy plastic scrap from an unregistered kabadiwala. Who pays GST?
You do, if you're registered. The reverse charge now covers plastic scrap bought from unregistered sellers.
Does reverse charge apply to metal scrap?
As reported, no. Metal scrap isn't in the new reverse charge list. But metal scrap suppliers lose the registration exemption, and GST-TDS applies when both sides are registered.
I only sell scrap and I'm not registered. What should I do?
The registration exemption no longer covers scrap suppliers. Speak to a GST professional about registration as soon as you can.
What is the GST-TDS rate on scrap?
We haven't included it because we couldn't confirm it from the official text. Please check the notification or ask your adviser.
How TaxQue can help
Changes like this are easy to miss in a busy month, and getting them wrong shows up later as notices and blocked credit. TaxQue can review your scrap suppliers, set up the RCM and TDS entries, and handle GST registration if you need it.
Drop us a line at info@taxque.in, call 9311256088, or visit taxque.in. We're happy to take a quick look.
Sources
- CBIC Tax Information Portal: Notification 04/2026-CT(Rate) https://taxinformation.cbic.gov.in/view-pdf/1010801, Official ↗ 06/2026-CT https://taxinformation.cbic.gov.in/view-pdf/1010812, Official ↗ 07/2026-CT https://taxinformation.cbic.gov.in/view-pdf/1010813 Official ↗ (could not be read on 3 Nov 2026)
- CorpLawUpdates, 29 Oct 2026: https://www.corplawupdates.in/updates/gst-scrap-trade-rcm-registration-tds-changes
- CAclubindia: https://www.caclubindia.com/news/cbic-issues-new-gst-notifications-rcm-registration-and-tds-changes-from-1st-nov-2026-26905.asp
This article is general information, not legal advice.
