What has changed
If you buy or sell scrap — used cooking oil, plastic waste, old tyres, metal scrap or electronic waste — your GST paperwork changes on 1 November 2026. The Central Board of Indirect Taxes and Customs (CBIC) has issued five notifications, all dated 27 October 2026, that together pull the scrap trade firmly inside the GST net: reverse charge on purchases from unregistered suppliers, compulsory registration for scrap suppliers, and tax deducted at source on deals between registered dealers.
The five notifications all carry the same file number, F. No. CBIC-190354/142/2026-TRU, are signed by Dheeraj Sharma, Under Secretary, and take effect on 1 November 2026. They were issued on the recommendations of the GST Council. Three of them are rate notifications and two are procedural — and keeping the two series apart matters, because notification numbers 06 and 07 exist in both series. This article covers the scrap package only: Notifications 02 and 03 of 2026 in the Central Tax (Rate) series, Notification 04 of 2026 in the Central Tax (Rate) series, and Notifications 06 and 07 of 2026 in the Central Tax (non-Rate) series.
💡 In one line: from 1 November 2026, scrap can no longer move through unregistered hands untaxed — the buyer pays under reverse charge, the seller must be registered, and registered-to-registered deals attract TDS.
At a glance
The five notifications, one by one
1. Reverse charge on scrap bought from unregistered suppliers — Notification 04/2026-Central Tax (Rate)
This is the centrepiece. Issued under Section 9(3) of the CGST Act, 2017, Notification 04/2026-Central Tax (Rate) amends Notification No. 4/2017-Central Tax (Rate) — the reverse-charge notification — and inserts four new entries in its table. In each case the supplier is any unregistered person and the recipient is any registered person, which means the registered buyer, not the seller, must pay the GST.
In plain terms: a registered recycler buying used cooking oil from a street-level collector, or plastic scrap from an unregistered kabadiwala, must now discharge GST on that purchase itself under reverse charge, instead of the transaction sitting outside the tax net because the seller is unregistered. The same applies to tyre scrap and e-waste. Note carefully what is missing from this list: metal scrap. Notification 04 contains no metal-scrap entry, so metal scrap bought from an unregistered supplier is not brought under reverse charge by this notification — but, as the next two notifications show, metal scrap is caught by the registration and TDS limbs instead.
2. Scrap suppliers lose the registration exemption — Notification 06/2026-Central Tax
Issued under Section 23(2) of the CGST Act, Notification 06/2026-Central Tax (non-Rate series) amends Notification No. 5/2017-Central Tax and substitutes the proviso to that notification. The effect is direct: the benefit of the registration exemption no longer applies to any person engaged in supplying any of these five categories — used cooking oil (1518), waste and scrap of plastics (3915), waste and scrap of tyres (4004), metal scrap (Chapters 72 to 81), or electrical and electronic waste and scrap (8549).
This is the provision that reaches the small end of the chain. A person whose only business is collecting and selling one of these scrap categories can no longer rely on the exemption to stay unregistered — the notification expressly carves these five categories out. Read with Notification 04, the design is clear: suppliers are pushed into registration, and where a supplier still remains unregistered, the registered buyer picks up the tax under reverse charge.
3. TDS on registered-to-registered scrap deals — Notification 07/2026-Central Tax
Issued under Section 1(3) read with Section 51 of the CGST Act, Notification 07/2026-Central Tax (non-Rate series) amends Notification No. 50/2018-Central Tax and substitutes clause (d) of that notification. The substituted clause brings within Section 51 tax deduction at source any registered person receiving a supply of the same five categories — used cooking oil (1518), plastics scrap (3915), tyres scrap (4004), metal scrap (Chapters 72 to 81) and e-waste (8549) — from another registered person.
So the three limbs interlock: unregistered-to-registered supplies attract reverse charge in the buyer's hands; registered-to-registered supplies attract TDS in the buyer's hands; and the supplier side loses the registration exemption altogether. A scrap consignment should now carry a tax trail at every stage, whichever side of the registration line it crosses.
4. Fertiliser and retreaded-tyre rates rationalised — Notification 02/2026-Central Tax (Rate)
Issued under Sections 9(1) and 15(5) of the CGST Act, Notification 02/2026-Central Tax (Rate) amends Notification No. 9/2025-Central Tax (Rate), the September 2025 rate notification. In Schedule I, which carries the 2.5% rate, serial number 237 is substituted with a single entry covering all goods — animal or vegetable fertilisers or organic fertilisers — that are pre-packaged and labelled, and its explanation expressly includes sea-weed extract based bio-stimulants registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985. A new entry, 272A, places retreaded tractor tyres (Chapter 4012) in the 2.5% schedule.
In Schedule II, which carries the 9% rate, serial number 138 is substituted to cover retreaded or used pneumatic tyres of rubber other than retreaded tractor tyres, along with solid or cushion tyres, tyre treads and tyre flaps of rubber. The split is neat and worth noting for retreaders: retreaded tractor tyres go to the 2.5% schedule, while other retreaded or used tyres stay in the 9% schedule.
5. Psyllium seeds exempted — Notification 03/2026-Central Tax (Rate)
Issued under Section 11(1) of the CGST Act in the public interest, Notification 03/2026-Central Tax (Rate) makes a single amendment to Notification No. 10/2025-Central Tax (Rate), the exemption notification: after serial number 87, a new serial number 87A is inserted exempting psyllium seeds (Isobgul or Isobgol), classified under 1211 90 13. Traders in Isobgol, a commodity with a large export and ayurvedic market, should check whether their supplies now fall within this exemption entry.
Old vs new
⚠️ Watch the metal-scrap asymmetry: metal scrap is the one category that appears in the registration and TDS limbs but not in the reverse-charge limb. A registered buyer of metal scrap from an unregistered supplier should not assume reverse charge applies, and should not assume the deal is untaxed either — the supplier is now meant to be registered, and once both sides are registered, TDS applies. Get this classification wrong and the return will be wrong in both directions.
Who is affected
The package reaches well beyond large recyclers. Used-cooking-oil aggregators supplying biodiesel makers, kabadi networks and plastic-waste dealers, tyre retreaders and used-tyre traders, metal-scrap yards and melting units, and e-waste dismantlers and refurbishers are all directly inside it. So is any registered manufacturer or trader that buys any of these materials as inputs — from 1 November, the buyer's own return, not the supplier's, carries the reverse-charge or TDS compliance for these purchases. Fertiliser dealers handling pre-packaged and labelled fertilisers and sea-weed bio-stimulants, and Isobgol traders, are affected by the two rate notifications.
What to do before 1 November 2026
The effective date is days away, so the practical steps are immediate. First, map every scrap purchase and sale against the five categories and their chapter headings — 1518, 3915, 4004, Chapters 72 to 81, and 8549 — because the notifications operate category by category, not on "scrap" in general. Second, if you supply any of the five categories and have been relying on the registration exemption, take advice on registration now; the exemption is withdrawn from 1 November. Third, registered buyers should reconfigure purchase accounting so that supplies from unregistered persons in the four reverse-charge categories attract reverse charge, and supplies from registered persons in all five categories attract Section 51 TDS, with the corresponding entries in returns and TDS certificates. Fourth, retreaders should re-check the rate split: retreaded tractor tyres sit in the 2.5% schedule, other retreaded or used tyres in the 9% schedule. Fifth, fertiliser and Isobgol traders should verify whether their goods fall within the substituted fertiliser entry or the new Isobgol exemption entry before the next invoice run. Finally, update vendor onboarding: from 1 November, whether a scrap supplier is registered or not changes the buyer's tax treatment, so supplier registration status must be captured before payment, not discovered at return-filing time.
What this package does NOT cover
Three cautions. First, notification numbers 06 and 07 also exist in the Central Tax (Rate) series, covering different subjects — those Rate-series notifications are separate instruments and are not part of this scrap package; do not mix their contents into these five. Second, the official portal copies of these five notifications leave the G.S.R. numbers blank, so this article cites notification numbers, dates and file number rather than G.S.R. numbers. Third, the notifications themselves substitute entries and clauses; the rates, return entries and TDS mechanics that apply around them flow from the CGST Act and Rules, so businesses should confirm the operative rate and filing entries for their own supplies with their tax adviser rather than reading them off this summary.
FAQs
From when do the scrap changes apply?
All five notifications take effect on 1 November 2026. Supplies on or after that date fall under the new entries; the notifications are dated 27 October 2026.
I buy plastic scrap from an unregistered dealer. Who pays the GST?
You do, as the registered recipient, under reverse charge — Notification 04/2026-Central Tax (Rate) inserts plastics waste and scrap (3915) into the reverse-charge table with the supplier as any unregistered person and the recipient as any registered person.
I only sell metal scrap and I am unregistered. Must I register now?
The registration exemption no longer applies to suppliers of metal scrap (Chapters 72 to 81) from 1 November 2026 under Notification 06/2026-Central Tax, so you should take advice on registration rather than assume the exemption continues.
Does reverse charge apply to metal scrap bought from an unregistered supplier?
No — Notification 04 contains no metal-scrap entry. But the supplier loses the registration exemption, and once both sides are registered, the deal attracts Section 51 TDS under Notification 07.
I buy e-waste from a registered dealer. Is TDS applicable?
Yes — under Notification 07/2026-Central Tax, a registered person receiving e-waste (8549) from another registered person falls within the substituted Section 51 TDS clause.
Are retreaded tractor tyres taxed at the same rate as other retreaded tyres?
No — retreaded tractor tyres (4012) are placed in the 2.5% schedule by new entry 272A, while other retreaded or used pneumatic tyres remain in the 9% schedule under the substituted serial number 138.
Is Isobgol now exempt from GST?
Psyllium seeds (Isobgul/Isobgol), heading 1211 90 13, are inserted as exemption entry 87A by Notification 03/2026-Central Tax (Rate), effective 1 November 2026.
Sources
Official texts on the CBIC Tax Information Portal (all dated 27 October 2026, F. No. CBIC-190354/142/2026-TRU, effective 1 November 2026):
- Notification No. 02/2026-Central Tax (Rate) — taxinformation.cbic.gov.in/view-pdf/1010799
- Notification No. 03/2026-Central Tax (Rate) — taxinformation.cbic.gov.in/view-pdf/1010800
- Notification No. 04/2026-Central Tax (Rate) — taxinformation.cbic.gov.in/view-pdf/1010801
- Notification No. 06/2026-Central Tax — taxinformation.cbic.gov.in/view-pdf/1010812
- Notification No. 07/2026-Central Tax — taxinformation.cbic.gov.in/view-pdf/1010813
Note: the portal copies of these notifications leave the G.S.R. numbers blank, so this article does not cite G.S.R. numbers for them. The Rate-series Notifications 06 and 07 of 2026 are separate instruments and are not covered here.
