The Central Government has tightened the GST registration rules for the recycling and scrap trade. Notification No. 06/2026-Central Tax dated 27 October 2026 (G.S.R. 934(E)) withdraws the registration exemption for persons supplying five categories of waste and scrap goods, including GST registration scrap suppliers. The notification takes effect on 1 November 2026.
If you trade, collect, aggregate or sell used cooking oil, plastic scrap, tyre scrap, metal scrap or e-waste, this notification decides whether you can stay unregistered. This article from Sagar S Gupta & Co, Chartered Accountants in Shivpur, Varanasi, explains what the notification says, who is affected and what to do now.
Quick summary
| Point | Details |
|---|---|
| Notification | No. 06/2026-Central Tax dated 27 October 2026 |
| Issued under | Section 23(2) of the CGST Act, 2017, on the GST Council’s recommendation |
| Amends | Notification No. 5/2017-Central Tax dated 19 June 2017 |
| Change | The proviso is substituted to cover five categories of goods |
| Effective date | 1 November 2026 |
| Effect | Suppliers of these goods cannot rely on the registration exemption in Notification 5/2017-Central Tax |
Background: the registration exemption under Notification 5/2017-Central Tax
Section 23(2) of the CGST Act lets the Government exempt categories of persons from registration. Notification No. 5/2017-Central Tax uses this power to exempt persons whose supplies are all taxable under reverse charge, meaning the recipient pays the tax. Such suppliers did not need to register, as they had no tax to collect or deposit.
This exemption became a concern in the scrap trade. A scrap supplier selling only to registered buyers under reverse charge could remain unregistered even with a large turnover, and so stay outside the system. Earlier, Notification No. 24/2024-Central Tax added a proviso to cover metal scrap, so that metal scrap suppliers must register once they cross the turnover threshold.
Understanding the implications of this notification is crucial for GST registration scrap suppliers to ensure compliance and avoid penalties.
What the new notification does
Notification 06/2026-Central Tax substitutes the proviso to Notification 5/2017-Central Tax. It now states that nothing in the exemption notification applies to a person engaged in the supply of any of these goods:
| Sl. | Goods | Classification |
|---|---|---|
| (i) | Used cooking oil | Heading 1518 of the Customs Tariff |
| (ii) | Waste and scrap of plastics | Heading 3915 |
| (iii) | Waste and scrap of tyres | Heading 4004 |
| (iv) | Metal scrap | Chapters 72 to 81 |
| (v) | Electrical and electronics waste and scrap | Heading 8549 |
Metal scrap was already covered by the earlier proviso. The newly added categories are used cooking oil, plastic scrap, tyre scrap and e-waste and scrap.
What this means in practice
Because the exemption no longer applies to these suppliers, the normal registration rules come into play:
- Below the threshold: a person whose aggregate turnover stays below the applicable Section 22 threshold, and who has no other compulsory registration trigger under Section 24, is not required to register. In general, the Section 22 threshold for suppliers of goods is ₹40 lakh, with a lower limit in certain special category States.
- Above the threshold: a person whose aggregate turnover crosses the threshold must take GST registration, within 30 days of becoming liable under Section 25(1). The exemption in Notification 5/2017-Central Tax cannot be used to avoid this.
- Other compulsory registration cases: Section 24 triggers, such as certain inter-State supplies of goods, continue to apply as per law.
The practical result is that a scrap supplier cannot remain permanently outside GST simply because all its sales attract reverse charge.
How this fits with the companion changes
This notification is one part of a package announced for 1 November 2026 following the 57th GST Council meeting. Reports of the related notifications indicate:
- Reverse charge: Notification No. 04/2026-Central Tax (Rate) extends reverse charge to specified waste and scrap goods and used cooking oil supplied by an unregistered person to a registered person.
- TDS: Notification No. 07/2026-Central Tax brings in tax deduction at source under Section 51 on supplies of these goods by registered suppliers to registered recipients. The Council recommendation was TDS at 2%.
In simple terms, supplies from unregistered suppliers are taxed through reverse charge in the hands of the buyer, supplies from registered suppliers attract TDS, and suppliers who cross the threshold must register. Readers should check the text of each notification for exact conditions, as this article covers only Notification 06/2026-Central Tax.
Who is affected
- Scrap dealers and traders in plastic, tyre, metal and e-waste scrap
- Aggregators and collection agents who collect used cooking oil or scrap from households, hotels, restaurants, housing societies and small collectors
- Recyclers and processors who purchase from such suppliers, including biodiesel makers, plastic granule units, tyre pyrolysis units and e-waste processors, as their vendor registration status affects their reverse charge and TDS obligations
- Hotels, restaurants and institutions that sell used cooking oil or scrap regularly
- Small suppliers near the turnover threshold who need to track turnover carefully
Practical steps to take
- Track aggregate turnover. Include all supplies, taxable and exempt, across the same PAN. Monitor how close you are to the threshold.
- Register in time. If you cross the threshold, apply for GST registration within 30 days of becoming liable, in FORM GST REG-01.
- Check goods classification. Confirm that your goods fall under the specified headings and chapters: 1518, 3915, 4004, Chapters 72 to 81, and 8549.
- Review your buyer relationships. Registered recipients should record the registration status of each vendor, as it decides whether reverse charge or TDS applies.
- Update invoicing and billing. Registered suppliers must issue proper tax invoices and charge GST.
- Check composite activity. If you deal in both specified scrap and other goods or services, review your overall registration position.
- Seek professional advice where your supplies are mixed or your turnover is close to the limit.
Common mistakes to avoid
- Assuming reverse charge means no registration. For these five categories, the exemption no longer applies once the threshold is crossed.
- Ignoring group or same-PAN turnover. Aggregate turnover is computed on a PAN basis.
- Treating the 1 November 2026 date casually. Review your turnover position before the date, not after.
- Misclassifying goods. Metal scrap, for example, spans Chapters 72 to 81, so the full range of metals is covered.
- Overlooking buyer obligations. Recipients must discharge reverse charge or deduct TDS as applicable, and your vendor’s status matters.
Frequently Asked Questions (FAQs)
1. What is Notification No. 06/2026-Central Tax?
It is a CBIC notification dated 27 October 2026 that substitutes the proviso to Notification 5/2017-Central Tax, so that the registration exemption for reverse charge suppliers does not apply to suppliers of five categories of scrap, waste and used cooking oil.
2. From when does it apply?
1 November 2026.
3. Which goods are covered?
Used cooking oil (heading 1518), waste and scrap of plastics (3915), waste and scrap of tyres (4004), metal scrap (Chapters 72 to 81) and electrical and electronics waste and scrap (8549).
4. Do all scrap suppliers now need GST registration?
Not automatically. The usual rules apply: registration is required if aggregate turnover crosses the Section 22 threshold or another compulsory registration trigger under Section 24 applies. What changes is that the reverse charge exemption can no longer be used to stay unregistered above the threshold.
5. Was metal scrap already covered?
Yes. An earlier amendment in 2024 added metal scrap. The new notification adds the four other categories and restates the proviso.
6. How soon must I register after crossing the threshold?
Within 30 days of becoming liable to registration.
7. What happens to supplies from unregistered suppliers?
As per the companion reverse charge notification, the registered recipient pays GST under reverse charge on specified supplies from unregistered persons, from 1 November 2026.
8. Is TDS applicable on these supplies?
A companion notification introduces TDS under Section 51 on supplies of these goods by registered suppliers to registered recipients. The conditions are in that notification.
9. Who should be most careful?
Small scrap collectors and aggregators whose turnover is near the threshold, and registered recyclers who buy from them.
Also Read: https://cassgc.com/2026/10/31/gst-tds-on-scrap-e-waste-used-cooking-oil-nov-2026-buyer-guide/
On 26 October 2026, the Central Board of Indirect Taxes and Customs (CBIC) issued three Central Tax notifications. Two more followed on 27 October 2026. On 26 October 2026, CBIC also issued eight circulars (Circular Nos. 257/03/2026-GST to 264/10/2026-GST). These circulars put into effect key recommendations of the 57th GST Council Meeting. They bring uniformity, procedural clarity and relief for taxpayers in the areas of registration, adjudication, pre-deposits, the Input Service Distributor (ISD) mechanism, compliance by banks and NBFCs, input tax credit on motor vehicles, and export refunds.
Below is a consolidated executive summary, prepared by Sagar S Gupta & Co, of the main points in each circular.
Notifications
| Number | Date | Category |
| 07/2026- Central Tax | 28-Oct-2026 | Seeks to amend notification No. 50/2018- Central Tax dated 13th September, 2018 |
| 06/2026- Central Tax | 28-Oct-2026 | Seeks to amend notification No. 5/2017- Central Tax dated 19th June, 2017 |
| 05/2026-Central Tax Refund Registration | 26-Oct-2026 | Seeks to notify the Central Goods and Services Tax (Amendment) Rules 2026. |
| 04/2026-Central Tax | 26-Oct-2026 | Seeks to notify category of supplies for purpose of e-invoicing. |
| 03/2026-Central Tax | 26-Oct-2026 | Seeks to notify section 153 to section 155 of Finance Act, 2026 to come into force |
Circular
| Number | Date | Category |
| 264/10/2026-GST | 26-Oct-2026 | Clarification in respect of the omission of rule 96(10) of the Central Goods and Services Tax Rules, 2017. |
| 263/09/2026-GST | 26-Oct-2026 | Clarification in respect of receipt of payment for export of goods or services. |
| 262/08/2026-GST | 26-Oct-2026 | Clarification on Input Tax Credit admissibility to authorised agents appointed by manufacturers for sale of motor vehicles, pursuant to Circular No. 231/25/2024-GST dated 10.09.2024. |
| 261/07/2026-GST | 26-Oct-2026 | Clarification on issues related to provisions of section 17(4) of the Central Goods and Services Tax Act, 2017. |
| 260/06/2026-GST | 26-Oct-2026 | Clarification on issues pertaining to Input Service Distributor. |
| 259/05/2026-GST | 26-Oct-2026 | Clarification on various issues pertaining to the amount paid as pre-deposit as per sub-section (6) of section 107 or sub-section (8) of section 112 of the CGST Act |
| 258/04/2026-GST | 26-Oct-2026 | Clarification on issues related to demand, adjudication and appeal proceedings under the CGST Act, 2017. |
| 257/03/2026-GST | 26-Oct-2026 | Guidelines for the handling of applications for GST registration. |
How Sagar S Gupta & Co can help
Sagar S Gupta & Co is a Chartered Accountants firm in Shivpur, Varanasi, led by CA Sagar Gupta (FCA, ACS, LLB, B.Com (Hons)), registered with ICAI. Since 2017, we have supported clients across manufacturing, industries, corporates, hotels, startups, trading, textiles, healthcare and education. We can help you:
- check whether you must register on your turnover and activities,
- complete GST registration and set up invoicing,
- manage reverse charge and TDS compliance when you buy scrap or used cooking oil,
- review returns and reconciliations for scrap trading businesses.
Contact Sagar S Gupta & Co for a GST registration and compliance review before 1 November 2026.
Disclaimer: This article is for general information only and is not legal or professional advice. Please read the official notifications and consult a qualified professional before acting.