GST TDS on Scrap from 1 November 2026: Used Cooking Oil, Plastic, Tyre and E-Waste Explained

Updated 12 November 2026. A plain-language summary for business owners, not legal or tax advice. Check the notifications and your facts with your CA before you change your process.

Short answer: From 1 November 2026, GST TDS under Section 51 of the CGST Act, which already applied to purchases of metal scrap, also applies to used cooking oil, plastic waste and scrap, tyre waste and scrap, and electrical and electronic (e-waste) scrap. A registered buyer who buys these goods from a registered supplier has to deduct 2% of the taxable value (1% CGST + 1% SGST, or 2% IGST) when the value under one contract is more than ₹2.5 lakh. The buyer needs a separate TDS registration in Form GST REG-07, deposits the tax by the 10th of the next month and files GSTR-7.

What changed

The change comes from Notification No. 07/2026-Central Tax dated 27 October 2026, which replaces clause (d) of the 2018 notification that lists who must deduct GST TDS. It followed the 57th GST Council meeting. Metal scrap was added to this list in October 2024 (Notification No. 25/2024-Central Tax). The 2026 notification widens it to five categories. The details are summarised by TaxGuru, and the official text is on the CBIC central tax notifications page.

Who has to deduct GST TDS?

The buyer: a registered person who receives these goods from another registered person. Typical examples are recyclers, biodiesel makers buying used cooking oil, tyre pyrolysis units, e-waste processors and manufacturers who buy plastic regrind. Traders who buy and resell scrap are also buyers for this purpose.

Three conditions decide whether TDS applies to a purchase:

• Both sides are registered. If the supplier is unregistered, there is no TDS. The buyer pays tax under reverse charge instead (see below).
• Contract value is more than ₹2,50,000. The test is the total taxable value under one contract. Exactly ₹2.5 lakh does not cross the limit.
• Place of supply. Under the proviso to Section 51(1), no TDS is deducted when both the supplier's location and the place of supply are in a state other than the buyer's state of registration. As Sandeep Ahuja & Co. explains, you test the place of supply, not just the GSTIN state codes.

How much, and on what value?

TDS is 2% of the taxable value, excluding GST and cess. Within a state it is split as 1% CGST and 1% SGST. Between states it is 2% IGST. The deduction is made when you pay or credit the supplier, whichever comes first.

Example: a recycler in Andhra Pradesh buys plastic scrap worth ₹5,00,000 (taxable value) from a registered dealer in the same state under one contract. The recycler deducts ₹5,000 CGST and ₹5,000 SGST, pays the dealer the balance and deposits ₹10,000 with the government.

Step-by-step for buyers

1. Take TDS registration in Form GST REG-07. Your normal GSTIN does not cover this. GSTN's advisory of 1 November 2026 says to choose "Others" under Constitution of Business in Part B of Table 2 and type the category, for example "Waste and Scrap of plastics Dealers" (TaxGuru, CAclubindia).
2. Flag vendors and items. Mark which suppliers sell notified goods and which HSN headings you buy.
3. Track contract value. Keep a contract or PO reference on every purchase so you can see when the ₹2.5 lakh limit is crossed.
4. Deduct at payment or credit, whichever is earlier.
5. Deposit by the 10th of the following month.
6. File GSTR-7 monthly by the 10th. Late filing attracts late fee, and late deposit attracts interest.

What suppliers should do

• Expect lower payments from registered buyers on large contracts. The 2% is not lost: once the buyer files GSTR-7 and you accept the entry on the GST portal, it shows in your electronic cash ledger.
• Use the credit to pay your GST, or claim a refund of any balance.
• Reconcile every month: compare what buyers deducted with what appears on the portal, and follow up with buyers who deducted but did not file.
• Recheck your registration. Notification No. 06/2026-Central Tax, issued the same day, says the registration exemption for persons whose supplies are fully under reverse charge does not apply to suppliers of these five categories. Suppliers who relied on it should review whether they now need GST registration.

Buying from unregistered suppliers: reverse charge

Many scrap collectors are not registered. TDS does not apply to them. According to Sandeep Ahuja & Co., Notification No. 04/2026-Central Tax (Rate) adds used cooking oil, plastic waste, tyre waste and e-waste to the reverse charge list for supplies from unregistered persons to registered persons from 1 November 2026, in the same way metal scrap was already covered. The registered buyer pays the GST and issues a self-invoice. Check the applicable rate for each item with your CA.

What this means for your billing and purchase software

Most errors here are process errors, not tax errors. If you run a purchase or ERP system, these changes help:

• An HSN-based rule that marks notified scrap items (1518, 3915, 4004, 8549 and Chapters 72 to 81).
• A contract-level running total with an alert when taxable value crosses ₹2.5 lakh.
• Automatic TDS deduction in the payment or credit voucher, split into CGST/SGST or IGST from the place of supply.
• A monthly GSTR-7 report (deductee GSTIN, invoice, taxable value, TDS) ready to upload.
• For unregistered vendors, an RCM self-invoice instead of TDS.
• On the sales side, a TDS receivable report so suppliers can match buyer deductions with the cash ledger.

Our GST billing software checklist and the 1 November 2026 GST changes checklist cover the other changes that took effect on the same day.

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