- Effective
- 1 Nov 2026 (RCM/TDS) · 1 Jan 2027 (e-invoicing)
- New RCM goods
- Used cooking oil, plastic/tyre scrap, e-waste
- The twist
- Unregistered supplier → RCM; registered supplier → 2% TDS
- Also
- Vehicle-renting RCM aligned to 18%; scrap suppliers lose reg. exemption
The short version
- From 1 November 2026, GST reverse charge (RCM) extends to used cooking oil, waste & scrap of plastics and tyres, and electrical/electronic waste when bought from an unregistered supplier — the registered recipient pays the tax. (Metal scrap has been under RCM since October 2024.)
- If the supplier of these goods is registered, RCM does not apply — instead the registered recipient must deduct 2% TDS (Section 51) where the contract value exceeds ₹2.5 lakh (excluding GST).
- Suppliers of these goods can no longer use the registration exemption meant for wholly-RCM suppliers — they must register once turnover crosses the Section 22 threshold.
- Renting of motor vehicles to a body corporate: the RCM exclusion is re-aligned to the 18% rate (from 12%).
- Separately, from 1 January 2027, e-invoicing extends to RCM supplies from unregistered suppliers and to import of services (for businesses above ₹5 crore turnover).
A cluster of GST notifications is about to reshape how businesses handle reverse charge and TDS — especially anyone dealing in scrap, used cooking oil, or renting vehicles to companies. The headline is that several new goods come under reverse charge from 1 November 2026, but the detail that really matters is the fork in the road: whether your supplier is registered or not now decides whether you pay tax under RCM or deduct 2% TDS. Get that wrong and you've either under-deducted or double-counted. Here's the full set of changes, in plain terms.
1. Reverse charge on used cooking oil, plastic/tyre scrap and e-waste
Via Notification No. 04/2026-Central Tax (Rate) (with matching IGST and UTGST notifications), from 1 November 2026, a registered person who receives the following goods from an unregistered supplier must pay GST on them under reverse charge:
| Goods | HSN |
|---|---|
| Used cooking oil | 1518 |
| Waste and scrap of plastics | 3915 |
| Waste and scrap of tyres | 4004 |
| Electrical and electronic waste and scrap | 8549 |
This mirrors the treatment already in force for metal scrap (Chapters 72–81), which came under reverse charge from unregistered suppliers in October 2024. In short, the scrap-and-waste RCM net is being widened well beyond metals.
2. Scrap suppliers lose the registration exemption
Through Notification No. 06/2026-Central Tax, suppliers of these goods (used cooking oil, plastic/tyre scrap, e-waste, and metal scrap) are removed from the registration exemption that applies to persons making only supplies on which the recipient pays RCM. The effect:
- Above the threshold → must register. A supplier of these goods must take GST registration once aggregate turnover exceeds the Section 22 threshold — they can't shelter behind the "wholly-RCM, so exempt from registration" route.
- Below the threshold → may stay unregistered. If turnover is under the threshold, the supplier can remain unregistered, and the registered recipient pays under reverse charge (per change 1 above).
3. The crucial fork: registered supplier means 2% TDS, not RCM
This is the part that causes the most confusion, so read it carefully. Notification No. 07/2026-Central Tax provides that where the supplier of these goods is registered, reverse charge does not apply. Instead, the registered recipient must deduct TDS under Section 51:
- Rate: 2% of the taxable value (1% CGST + 1% SGST within a State; 2% IGST inter-State), excluding GST.
- Threshold: only where the total value of taxable supply under a contract exceeds ₹2.5 lakh (excluding GST).
So the supplier's registration status decides the mechanism entirely:
| Your supplier is… | What the registered recipient does |
|---|---|
| Unregistered | Pay GST under reverse charge (RCM) on the purchase |
| Registered | No RCM — supplier charges GST; recipient deducts 2% TDS (Section 51) if contract value > ₹2.5 lakh |
Why this matters in practice
A scrap or used-cooking-oil buyer now has to check each supplier's GST status before deciding the tax treatment of the purchase. Buy from an unregistered vendor and you self-account for GST under RCM. Buy from a registered vendor on a contract above ₹2.5 lakh and you instead withhold 2% TDS and report it — the vendor charges GST normally. Treating both the same way is the classic error this change will throw up. (For metal scrap, this registered-supplier-TDS treatment has applied since October 2024.)
4. Renting of motor vehicles to a body corporate — RCM aligned to 18%
Via Notification No. 08/2026-Central Tax (Rate), the reverse charge entry for renting of a passenger motor vehicle (with fuel) by a person other than a body corporate to a body corporate is re-aligned to the 18% rate. The body corporate pays tax under reverse charge unless the supplier charges GST at 18% (the exclusion earlier referred to 12%). In rate terms, the carve-out shifts from central tax 6% to 9% — i.e., 12% to 18% total.
And from 1 January 2027: e-invoicing on reverse charge supplies
Separately, e-invoicing is being extended. So far it covered only supplies to registered persons and exports. From 1 January 2027, for registered persons whose aggregate turnover in any financial year from 2017-18 onwards exceeds ₹5 crore (exempt categories excluded), e-invoicing also covers:
- Supplies on which tax is payable under reverse charge, where received from an unregistered supplier; and
- Import of services.
Practically, the recipient's self-invoice for these supplies — already required within 30 days of receipt under Rule 47A — must now also be generated on the Invoice Registration Portal (IRP) under supply type RCMDOM (domestic RCM) or RCMIMP (import of services). We've covered the mechanics of this self-invoicing-on-IRP change in detail in a separate post — this is the notification that puts a firm date on it.
What businesses should do before 1 November
- Map your scrap / used-cooking-oil / e-waste purchases. For each vendor, record whether they're GST-registered — that single fact now decides RCM vs TDS.
- Set up RCM self-accounting for purchases from unregistered vendors of these goods, including the self-invoice under Rule 47A.
- Configure 2% TDS (Section 51) for purchases from registered vendors where the contract crosses ₹2.5 lakh — and get your GST TDS registration/returns (GSTR-7) in order if not already.
- Scrap/UCO suppliers: check your registration. If your turnover is over the Section 22 threshold, you can no longer stay unregistered on the "wholly-RCM" exemption — register in time.
- Body corporates renting vehicles: review your vehicle-rental contracts and the GST rate the supplier charges to confirm the correct RCM position from 1 November.
- ₹5 crore+ businesses: plan now for e-invoicing of RCM-from-unregistered and import-of-services self-invoices from 1 January 2027.
Frequently asked
Which new goods come under reverse charge from 1 November 2026?
If I buy scrap from a registered dealer, do I pay RCM?
What is the TDS rate and threshold on these goods?
Can a small scrap supplier still avoid GST registration?
What changed for renting motor vehicles to a company?
When does e-invoicing on reverse charge supplies start?
Dealing in scrap, used cooking oil, or vehicle rentals?
efiletax sets up your RCM self-accounting, GST TDS (Section 51 / GSTR-7), supplier-status mapping and e-invoicing — so you apply the right mechanism to every purchase from 1 November.
Talk to our GST teamDisclaimer: This article summarises GST amendments effective 1 November 2026 extending reverse charge to used cooking oil and specified waste and scrap from unregistered suppliers (Notification 04/2026-Central Tax (Rate)), removing the registration exemption for such suppliers (06/2026-Central Tax), introducing 2% TDS under Section 51 where the supplier is registered (07/2026-Central Tax), and aligning the renting-of-motor-vehicle reverse charge to the 18% rate (08/2026-Central Tax (Rate)), together with the extension of e-invoicing to reverse charge supplies and import of services from 1 January 2027. It is based on information available as at the date of publication and is for general understanding only — please refer to the official notifications and verify HSN coverage, thresholds and your specific facts before acting. This is not legal or tax advice; consult a qualified professional. Talk to efiletax if you need help.