GST TDS on Scrap, Used Cooking Oil, E-Waste: GSTN Sets REG-07 Registration Steps

GST TDS on scrap now reaches well beyond metal. From 1 November 2026, a registered business that buys used cooking oil, plastic scrap, tyre scrap, metal scrap or electrical and electronic waste from another registered person must deduct tax at source under section 51 of the CGST Act, 2017. GSTN has followed up with an advisory dated 1 November 2026, titled "TDS Registration Advisory for Dealers in Scrap and Other Notified Goods", which tells these buyers how to register as deductors in FORM GST REG-07 when the form has no ready-made option for the new categories.

The legal change sits in Notification No. 07/2026-Central Tax dated 27 October 2026, issued on the recommendations of the GST Council. It substitutes clause (d) of Notification No. 50/2018-Central Tax dated 13 September 2018, the notification that names the persons who must deduct GST TDS. Clause (d) earlier covered only buyers of metal scrap, a category added by Notification No. 25/2024-Central Tax with effect from 10 October 2024. The substituted clause now covers "any registered person receiving supply of any of the following goods from another registered person" and lists five categories by their heading in the First Schedule to the Customs Tariff Act, 1975.

Goods covered by GST TDS from 1 November 2026

The table sets out the five categories, the tariff entries that define them and the two mechanisms that now apply to each, depending on whether the seller is registered.

Coverage turns on classification, not on trade usage. A buyer should read the HSN on the seller's invoice against these entries before deciding whether to deduct: material that the trade calls "waste" but that falls outside headings 1518, 3915, 4004 and 8549 or Chapters 72 to 81 is not within clause (d). Both sides must also be registered persons. A purchase from an unregistered seller attracts reverse charge instead, as explained further below.

How the 2% deduction works: rate, ₹2.5 lakh contract test and GSTR-7

The deduction is 2% of the taxable value, excluding the GST shown on the invoice. For an intra-State purchase it is split as 1% CGST and 1% SGST or UTGST; for an inter-State purchase the full 2% is deducted as IGST. The buyer deducts it from the payment made or credited to the seller, not at the time of the invoice.

No deduction is required where the total value of supply under a contract does not exceed ₹2.5 lakh, excluding tax. The test is applied to the contract, so a running purchase order is measured on its total value even when each invoice is small. The amount deducted in a month is deposited by the 10th of the following month along with FORM GSTR-7. For deductions on payments made in November 2026, the first return falls due on 10 December 2026. The portal then generates a TDS certificate in FORM GSTR-7A for each seller.

On the seller's side, the deducted amount appears for acceptance on the GST portal. Once accepted, it is credited to the seller's electronic cash ledger under section 51(5), where it can be used to pay output tax; an unused balance can be claimed as a refund under section 54. Sellers of plastic or tyre scrap with thin margins should plan for this, since 2% of the taxable value now reaches them through the cash ledger rather than in the bank. The mechanics are the same ones metal scrap buyers have followed for two years, and our explainer on GST TDS on metal scrap and GSTR-7 filing walks through them in more detail.

Illustration: a ₹6 lakh plastic scrap contract

A registered recycler in Gujarat issues one purchase order to a registered aggregator in Gujarat for plastic scrap of heading 3915 worth ₹6,00,000 (taxable value), delivered and paid for in four lots of ₹1,50,000 during November 2026. No single invoice crosses ₹2.5 lakh, but the contract does, so the recycler deducts on every payment.

• TDS on each lot: 2% of ₹1,50,000 = ₹3,000, deducted as ₹1,500 CGST and ₹1,500 SGST.
• TDS on the contract: ₹3,000 × 4 = ₹12,000, deposited with the November GSTR-7 by 10 December 2026.
• Amount paid to the aggregator per lot: ₹1,50,000 plus the GST charged on the invoice, less ₹3,000.

Had the aggregator been in Maharashtra, the deduction would have been ₹3,000 IGST per lot. Had the purchase order been for ₹2,40,000 in total, no deduction would arise at all.

Registering as a TDS deductor in FORM GST REG-07

Section 24 of the CGST Act requires every person who must deduct tax under section 51 to obtain registration as a deductor, whether or not the person is otherwise registered. The buyer's regular GSTIN does not serve this purpose; TDS registration is applied for separately in FORM GST REG-07. The constitution-of-business list in that form was not built for private buyers of scrap, which is the gap the 1 November advisory fills. GSTN has set out these steps:

1. In Part B of Table 2 of FORM GST REG-07, select "Others" under "Constitution of Business".
2. In the text box that appears, enter the category, for example "Used Cooking Oil Dealers", "Waste and Scrap of Plastics Dealers", "Waste and Scrap of Tyres Dealers" or "Electrical and Electronics Waste and Scrap Dealers".
3. Fill in the remaining details of FORM GST REG-07.
4. Submit the application.

The advisory recalls that GSTN issued a similar advisory on 22 October 2024 when metal scrap was brought under TDS, and nothing in the new advisory asks buyers already registered under that route to apply again. It also sets no separate deadline for registration. The obligation to deduct, however, has applied since 1 November 2026, and the November GSTR-7 is filed under the TDS registration, so a buyer who has not applied yet has a few weeks at most before the first return is due.

Purchases from unregistered scrap sellers go under reverse charge

TDS is only half of the package. The 57th GST Council's recommendations of 8 October 2026 brought waste and scrap of plastics, electrical and electronics waste and scrap, waste and scrap of tyres and used cooking oil under reverse charge when an unregistered person supplies them to a registered person. The Council added that the supplier must take registration as and when it crosses the threshold limit, and that the registered recipient must pay tax under reverse charge even when the supplier is below that threshold. The reverse charge entries were notified by Notification No. 04/2026-Central Tax (Rate) on the same date, alongside a companion registration notification.

A buyer therefore runs two tracks from 1 November 2026. Purchases from a registered seller carry forward-charge GST on the seller's invoice and 2% TDS by the buyer once the contract crosses ₹2.5 lakh. Purchases from an unregistered seller carry GST payable by the buyer under reverse charge, with no TDS. The vendor master has to record each seller's registration status, and a collector who registers mid-contract moves from reverse charge to forward charge with TDS from the date registration takes effect. Sellers working out when they cross the limit can check the thresholds in our guide to GST registration eligibility and process.

Mixed loads, October purchase orders and the November return

Two practical questions are not answered by the notification or the advisory. A contract that combines notified scrap with other goods has no stated rule for applying the ₹2.5 lakh test or the deduction, so the notified portion should be identifiable on the invoice. Notification No. 07/2026-Central Tax carries no transition clause, which leaves purchase orders signed in October and paid in November as the cases most likely to need a recorded position.

The date to work back from is 10 December 2026, when the first GSTR-7 covering these goods is due along with the deposit of tax deducted on November payments.

Official source: View the official source document