Do I pay reverse charge if I buy plastic scrap from a registered dealer?

No. Reverse charge applies only when the seller is not registered. A registered dealer puts GST on the bill, and you pay it like any other bill. But if you are registered and the contract is more than ₹2.5 lakh, you also cut 2% GST TDS from the payment. Example: a registered recycler buys plastic scrap worth ₹4,00,000 from a registered dealer. The recycler cuts 2% = ₹8,000 as TDS and pays the rest to the dealer.

Is the 2% GST TDS the same as income-tax TDS?

No. It is a separate GST rule under section 51 of the CGST Act. You cut it only when both the buyer and the seller are registered. You report it in Form GSTR-7, and the seller gets it as credit in their GST cash ledger. It does not appear in any income-tax return or in Form 26AS. Example: on a ₹5,00,000 purchase, the GST TDS is ₹10,000, shown in GSTR-7 only.

Does the new reverse charge cover everything I buy from an unregistered seller?

No. Reverse charge applies only to goods and services that the government has listed. From 1 November 2026, four more goods are on the list: used cooking oil, plastic scrap, tyre scrap and e-waste. Example: a registered business buys stationery from an unregistered shop and pays no reverse charge. The same business buys used tyre scrap from an unregistered dealer and does pay it.

I only sell scrap and I am not registered. Do I need a GSTIN now?

Please check. Earlier, a seller whose whole supply was under reverse charge did not need to register. From 1 November 2026, that relief does not apply to these five kinds of goods. So the normal registration rules now apply to you. These are the turnover limit and the rules for selling to other states. Example: a dealer who sells ₹30 lakh of plastic scrap a year in one state should check the turnover limit for that state. A dealer who sells to another state should check the rules for that.

Does metal scrap follow the same rules?

Partly. Metal scrap (Chapters 72 to 81) has been under reverse charge since October 2024, so the new reverse charge rule adds only the four other goods. But the new registration rule and the new TDS rule list all five goods, including metal scrap. Example: a registered buyer pays ₹6,00,000 to a registered dealer for steel scrap. The buyer cuts 2% = ₹12,000 as GST TDS.

GST on Scrap From 1 Nov 2026: RCM, 2% TDS and Registration

From 1 November 2026, GST rules are different for five kinds of waste and scrap. Three notifications dated 27 October 2026 made the change. They decide who pays the tax, who cuts tax at source (TDS), and who must register.

This post is for you if you buy, sell or recycle used cooking oil, plastic scrap, tyre scrap or e-waste. It shows which rule applies to which purchase.

The short version

You are registered and you buy from an unregistered seller: you pay the GST yourself. This is called reverse charge (RCM). It now applies to used cooking oil, plastic scrap, tyre scrap and e-waste.
You are registered and you buy from a registered seller: the seller charges GST as usual. If the contract is more than ₹2.5 lakh (before GST), you also cut 2% GST TDS from the payment.
You sell these goods: the old relief from registration no longer applies to you. You may need a GSTIN now.
Metal scrap was already under reverse charge. Now it is also in the new registration and TDS rules, along with the four new goods.

The five goods

Goods	Heading (Customs Tariff)
Used cooking oil	1518
Waste and scrap of plastics	3915
Waste and scrap of tyres	4004
Metal scrap	Chapters 72 to 81
Electrical and electronics waste and scrap	8549

Use our HSN/SAC Finder to find the heading and the GST rate for your goods. The rate depends on the heading. We do not list rates here. The examples below use 18% only to show how the sum works.

Which rule applies? It depends on the seller

You are registered and you buy from	What happens
A seller who is not registered	You pay the GST under reverse charge. No TDS.
A registered seller, contract above ₹2.5 lakh	The seller charges GST. You cut 2% GST TDS.
A registered seller, contract ₹2.5 lakh or less	The seller charges GST. No TDS.

The two rules never apply to the same purchase. One is for sellers who are not registered. The other is for registered sellers.

Rule 1: reverse charge on four goods

Notification 04/2026-Central Tax (Rate) adds four goods to the reverse charge list: used cooking oil (1518), plastic waste and scrap (3915), tyre waste and scrap (4004), and electrical and electronics waste and scrap (8549). If you are registered and you buy any of these from a seller who is not registered, you pay the GST. The rule starts on 1 November 2026.

Example, using 18%: a registered recycler buys plastic scrap worth ₹1,00,000 from an unregistered dealer. The dealer's bill has no GST. The recycler pays ₹1,00,000 to the dealer. The recycler also pays ₹18,000 GST to the government in cash (₹9,000 CGST + ₹9,000 SGST). Then the recycler can claim the ₹18,000 as input tax credit (ITC), if allowed. The tax goes in GSTR-3B Table 3.1(d).

The dealer cannot give a tax invoice, so the recycler makes a self-invoice for the purchase. To learn more, read reverse charge (RCM) in GST. Our RCM calculator has no ready option for these goods yet. Choose "Other notified supply" and enter the rate for your heading.

Rule 2: 2% GST TDS when you buy from a registered seller

Notification 07/2026-Central Tax changes an older notification (50/2018-Central Tax). Now, if you are registered and you buy any of the five goods from another registered person, you must cut GST TDS. This also starts on 1 November 2026.

The notification does not change how the TDS is worked out. That comes from section 51 of the CGST Act:

Rate: 2% of the payment to the seller. On a sale within the state, this is 1% CGST + 1% SGST. On a sale to another state, it is 2% IGST.
When: the total value of the contract is more than ₹2.5 lakh, not counting GST.
It is not income-tax TDS. It is a separate GST rule.

Example: a registered recycler buys tyre scrap worth ₹5,00,000 from a registered dealer in the same state. GST at 18% is ₹90,000, so the bill is ₹5,90,000. The recycler cuts 2% of ₹5,00,000 = ₹10,000 (₹5,000 CGST + ₹5,000 SGST). The recycler pays ₹5,80,000 to the dealer. The ₹10,000 goes to the government, and the dealer gets it as credit in their cash ledger.

To cut GST TDS, you must register for it in Form GST REG-07. Then you pay the tax you cut and file Form GSTR-7. Check the due dates on the GST portal. For the monthly dates, see our GST due dates post.

Rule 3: no relief from registration for these sellers

Notification 5/2017-Central Tax said that a person whose whole supply was under reverse charge did not need to register. Notification 06/2026-Central Tax says this relief does not apply to a person who supplies any of these:

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 electronics waste and scrap (8549).

This does not mean every scrap seller must register. It only means the old relief is gone. Now the normal rules decide. These are the turnover limit for your state and the rules for selling to other states.

If you buy from small scrap collectors, remember this: some of them may now get a GSTIN. If they do, the TDS rule applies to them, not reverse charge. Check their number with our GSTIN validator.

What to do now

Make a list of the goods you buy and sell. Match them with the five goods above.
Note if each supplier is registered. This one fact decides between reverse charge and TDS.
If you buy from sellers who are not registered: make a self-invoice, pay the tax in cash, and show it in GSTR-3B Table 3.1(d).
If you buy from registered sellers (contract above ₹2.5 lakh): register for GST TDS, cut 2%, and file GSTR-7.
If you sell: check whether you now need a GSTIN.

Summary

On 1 November 2026, four goods join the reverse charge list: used cooking oil, plastic scrap, tyre scrap and e-waste. Metal scrap was already on it.
Registered seller and contract above ₹2.5 lakh: cut 2% GST TDS. This covers all five goods.
Seller not registered: reverse charge. The two rules never overlap.
The old relief from registration does not apply to sellers of these five goods.

Sources

CBIC Tax Information Portal: GST notifications
Notification 04/2026-Central Tax (Rate), 27 October 2026 (reverse charge on the four goods)
Notification 06/2026-Central Tax, 27 October 2026 (registration)
Notification 07/2026-Central Tax, 27 October 2026 (GST TDS)

We read the three notifications on 6 November 2026 on a site run by chartered accountants (CAalley). We did not compare them with the Gazette copies. The 2% rate and the ₹2.5 lakh limit come from section 51 of the CGST Act, not from the notifications. The October 2024 start for metal scrap comes from the notifications' amendment history. We did not check it separately. Please check the latest text before you file. This is not legal advice.