GST TDS extended to registered buyers of used cooking oil, plastic scrap, tyre scrap, metal scrap and e-waste (w.e.f. 01.11.2026)
From 1 November 2026, a registered person who buys any of five notified categories of scrap and waste from another registered person must deduct GST at source at 2% under Section 51 of the CGST Act, 2017. Until now, this obligation on private buyers applied only to metal scrap. The change follows the recommendation of the 57th GST Council and is designed to build an audit trail for B2B trade in the scrap and recycling sector.
At a glance
Particulars | Details |
Notification | No. 07/2026-Central Tax dated 27.10.2026 (G.S.R. 935(E)) |
Power exercised | Section 1(3) read with Section 51 of the CGST Act, 2017 |
Amends | Clause (d) of Notification No. 50/2018-Central Tax dated 13.09.2018 (substituted) |
Earlier amendment | Notification No. 25/2024-Central Tax dated 09.10.2024 (metal scrap, from 10.10.2024) |
Council reference | 57th GST Council, Press Release para C1(5); CBIC FAQs Q. 9, 10 and 14 (goods) |
Effective date | 01.11.2026 |
Rate of TDS | 2% (1% CGST + 1% SGST/UTGST, or 2% IGST) |
Threshold | Contract value above ₹2.5 lakh (excluding GST) |
Companion notifications | No. 04/2026-Central Tax (Rate) (reverse charge) and No. 06/2026-Central Tax (registration), both dated 27.10.2026 |
How GST TDS has evolved
Section 51 was originally meant for government buyers. Its reach has since been widened in stages to private buyers in the scrap trade.
Phase | Who must deduct | Legal basis |
From 01.10.2018 | Central/State Government departments and establishments, local authorities, governmental agencies, and bodies notified under Section 51(1)(d): authorities or boards set up by statute or with 51% or more government equity or control, government-established societies under the Societies Registration Act, 1860, and public sector undertakings | Notification No. 50/2018-Central Tax |
From 10.10.2024 | Any registered person receiving metal scrap (Chapters 72–81) from another registered person | Clause (d) inserted by Notification No. 25/2024-Central Tax |
From 01.11.2026 | Any registered person receiving any of the five goods listed below from another registered person | Clause (d) substituted by Notification No. 07/2026-Central Tax |
Goods now covered by clause (d)
The substituted clause covers a registered person who receives supply of the following goods from another registered person. Classification follows the First Schedule to the Customs Tariff Act, 1975.
S. No. | Goods | Tariff classification | Status |
(i) | Used cooking oil | Heading 1518 | New |
(ii) | Waste and scrap of plastics | Heading 3915 | New |
(iii) | Waste and scrap of tyres | Heading 4004 | New |
(iv) | Metal scrap | Chapters 72 to 81 | Continues (since 10.10.2024) |
(v) | Electrical and electronics waste and scrap | Heading 8549 | New |
Mechanics of the deduction
Aspect | Position |
Rate (intra-State) | 1% CGST + 1% SGST/UTGST |
Rate (inter-State) | 2% IGST (Section 20, IGST Act) |
When TDS applies | Total value of supply under a contract exceeds ₹2.5 lakh, excluding tax |
Base for deduction | Taxable value only; CGST, SGST/UTGST, IGST and cess on the invoice are excluded |
Point of deduction | When payment is made or credited to the supplier |
Registration | Separate registration as tax deductor in FORM GST REG-07 (Section 24(vi) read with Rule 12) |
Deposit and return | By the 10th of the following month, through FORM GSTR-7 (Section 39(3) read with Rule 66) |
Certificate | FORM GSTR-7A, generated on the GST portal for the supplier |
Location exclusion | No deduction where the supplier's location and the place of supply are both in a State/UT other than the recipient's State/UT of registration (Explanation to Section 51(1)) |
Illustrations
The figures below are our own examples. GST on the goods is assumed at 18% only for the arithmetic.
Case | Facts | TDS position |
A. Intra-State | A Delhi recycler buys plastic scrap from a Delhi-registered dealer. Contract value ₹4,00,000 + GST ₹72,000. | TDS on ₹4,00,000 at 2% = ₹8,000 (₹4,000 CGST + ₹4,000 SGST). Recycler pays the dealer ₹4,64,000 and deposits ₹8,000 through GSTR-7. |
B. Inter-State | A Delhi e-waste processor buys e-waste from a registered supplier in Haryana. Contract value ₹10,00,000. | TDS at 2% IGST = ₹20,000. |
C. Below threshold | A biodiesel unit buys used cooking oil worth ₹2,00,000 under a single contract. | No TDS, as the contract value does not exceed ₹2.5 lakh. |
D. Running purchase order | An open PO for tyre scrap, with invoices of ₹1,00,000 each over six months (₹6,00,000 in all). | Test the threshold on the total contract value. TDS applies even though each invoice is below ₹2.5 lakh. |
E. Unregistered seller | A recycler buys plastic scrap from an unregistered collector. | No TDS. The recycler pays GST under reverse charge (Notification No. 04/2026-Central Tax (Rate)). |
Transaction-wise treatment from 01.11.2026
Type of transaction | TDS under Section 51 | Other GST consequence |
Registered supplier → registered buyer, contract above ₹2.5 lakh | Yes, 2% | Supplier charges GST on forward charge and gets TDS credit in its cash ledger |
Registered supplier → registered buyer, contract up to ₹2.5 lakh | No | Forward charge |
Unregistered supplier → registered buyer | No | Buyer pays GST under reverse charge |
Any supplier → unregistered buyer | No | Forward charge, if the supplier is registered |
Compliance checklist for buyers (deductors)
Obtain deductor registration in FORM GST REG-07. A buyer already registered as a deductor for metal scrap can continue with that registration.
Map every vendor of the five categories by GST status, and configure the ERP so that registered vendors trigger TDS and unregistered vendors trigger reverse charge.
Track contract-wise values, including open and running purchase orders, against the ₹2.5 lakh limit.
Deduct 2% of the taxable value at the time of payment or credit, whichever is earlier.
Deposit the TDS and file FORM GSTR-7 by the 10th of the following month.
Make sure the GSTR-7A certificate is generated for each supplier.
Review payments made on or after 01.11.2026 against invoices for supplies made earlier.
Position of suppliers (deductees)
The amount deducted appears in GSTR-7A. Once the supplier accepts it in the TDS/TCS credit statement, it is credited to the electronic cash ledger under Section 51(5).
The credit can be used to pay output tax. Any unused balance can be claimed as a refund under Section 54.
Suppliers should reconcile TDS credits against receivables and plan working capital for the 2% held back on each payment.
Consequences of default
Default | Provision |
Late deduction or late deposit | Interest under Section 50 |
Failure to deduct or deposit | Penalty under Section 122(1)(v) |
Recovery of amounts not deducted or deposited | Section 51(6) and 51(7) |
Points still to watch
Payments made on or after 01.11.2026 for supplies made before that date. The notification does not deal with this expressly.
Treatment of credit notes, debit notes and mixed contracts covering both notified and other goods.
Corresponding notifications by State Governments under their SGST Acts.
Official document: Notification No. 07/2026-Central Tax dated 27.10.2026 (e-Gazette)
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