Scrap under GST from 1 November 2026: buyer pays on unregistered sellers, sellers must register, 2% TDS above ₹2.5 lakh

CBIC issued a set of notifications on 27 October 2026 that close the gap in how scrap moves through the GST chain. They apply from 1 November 2026.

What changed Copy link

• Reverse charge (Notification 04/2026-Central Tax (Rate)). When a registered business buys used cooking oil (HSN 1518), plastic waste and scrap (3915), tyre waste and scrap (4004) or electrical and electronic waste and scrap (8549) from an unregistered seller, the buyer pays the GST. Metal scrap (Chapters 72 to 81) has been under reverse charge since October 2024.
• Registration (Notification 06/2026-Central Tax). Sellers of these goods and of metal scrap no longer get the exemption that let a person whose sales were all under reverse charge stay unregistered. Once their turnover crosses the limit, they must register.
• GST TDS (Notification 07/2026-Central Tax). A registered buyer of these goods from a registered seller deducts GST TDS under section 51: 2% in all (1% CGST + 1% SGST, or 2% IGST), on contracts above ₹2.5 lakh. The buyer needs a TDS registration (REG-07) and files GSTR-7.

What to do Copy link

If you sell scrap from your factory: you charge GST as before, but a registered buyer will now deduct 2% TDS on contracts above ₹2.5 lakh; the amount reaches your electronic cash ledger and can be used to pay your GST. If you buy scrap: pay GST under reverse charge on purchases from unregistered sellers, and register for GST TDS (REG-07), deduct 2% on contracts above ₹2.5 lakh from registered sellers and file GSTR-7 by the 10th of the next month. If you deal in scrap: register once over the limit; buyers otherwise have to pay the tax for you under reverse charge, and many will prefer registered sellers.

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