Summary: Notification No. 06/2026–Central Tax, dated 27 October 2026, amends Notification No. 5/2017–Central Tax with effect from 1 November 2026. The amendment withdraws the special GST registration exemption for persons supplying five specified categories of goods: used cooking oil, plastic waste and scrap, tyre waste and scrap, metal scrap, and electrical and electronic waste and scrap. The exemption previously applied to persons whose entire outward supplies attracted tax under the reverse charge mechanism. Metal scrap suppliers were already excluded from this exemption under Notification No. 24/2024–Central Tax. The latest amendment extends the exclusion to four additional categories, aligning registration requirements with the expansion of reverse charge provisions. Consequently, suppliers of these goods must examine their liability to register under the normal turnover thresholds and other applicable provisions of the CGST Act. Withdrawal of the special exemption does not, by itself, require every small supplier to obtain registration. For registered buyers, the changes affect reverse charge compliance and tax deduction at source. Notification No. 04/2026–Central Tax (Rate) extends reverse charge to specified purchases from unregistered suppliers, while Notification No. 07/2026–Central Tax expands the relevant TDS provisions for transactions between registered persons. Dealers and recyclers should review turnover, supplier registration status, invoicing, self-invoicing, reverse charge payments and applicable TDS obligations before the new rules take effect.
Scrap Dealers Can No Longer Skip GST Registration: Notification 06/2026 Central Tax Explained
The change in short
From 1 November 2026, a person who supplies used cooking oil, plastic scrap, tyre scrap, metal scrap or electronic waste cannot claim the special exemption from GST registration that is given to suppliers whose entire supplies are taxed under reverse charge.
This is done by Notification No. 06/2026 Central Tax dated 27 October 2026, issued under Section 23(2) of the CGST Act on the recommendation of the GST Council. It amends Notification No. 5/2017 Central Tax dated 19 June 2017.
First, the exemption that is being taken away
Normally, any person whose turnover crosses the threshold limit must register under GST. For a person dealing only in goods, that limit is ₹40 lakh a year in Andhra Pradesh and most other States, and ₹20 lakh in a few States such as Telangana.
But Notification No. 5/2017 Central Tax gave a special exemption. If every supply a person makes is one on which the buyer pays the tax under reverse charge, that person need not register at all, whatever his turnover. The thinking was simple: the government already gets its tax from the buyer, so why make the seller register?
In October 2024, when reverse charge was introduced on metal scrap bought from unregistered persons, a proviso was added to this notification (by Notification No. 24/2024 Central Tax). It said that the exemption will not apply to persons supplying metal scrap. The concern behind it was that the scrap trade had large numbers of unregistered dealers, fake invoices and missing tax, and the government wanted the bigger dealers inside the system.
What Notification 06/2026 does
Notification 06/2026 replaces that proviso with a wider one. From 1 November 2026, the registration exemption under Notification 5/2017 will not apply to any person engaged in the supply of any of these five goods:
| No. | Goods | Customs Tariff |
|---|---|---|
| 1 | Used cooking oil | Heading 1518 |
| 2 | Waste and scrap of plastics | Heading 3915 |
| 3 | Waste and scrap of tyres | Heading 4004 |
| 4 | Metal scrap | Chapters 72 to 81 |
| 5 | Electrical and electronic waste and scrap | Heading 8549 |
Metal scrap was already there. The other four are new.
This goes along with another recommendation of the 57th GST Council: that GST on these four new items, when a registered person buys them from an unregistered person, be paid by the buyer under reverse charge, exactly as is done for metal scrap today. The Council said in the same breath that the supplier must take registration once he crosses the threshold. Notification 06/2026 is the legal step that makes the second part work.
What it means on the ground
Take two small dealers in a town in Andhra Pradesh.
Ramaiah collects used plastic from shops and houses and sells it to a registered recycling unit. His sales this year will be about ₹60 lakh. Ramaiah cannot now say, “My buyer pays the GST under reverse charge, so I don’t need registration.” He has crossed ₹40 lakh, so he must register. Once he is registered, his sales are no longer under reverse charge. He will raise a proper tax invoice, charge GST, file returns, and his buyer will deduct TDS on payment under Notification 07/2026.
Lakshmi runs a small business collecting used cooking oil from hotels. Her sales are about ₹15 lakh a year. She is below the threshold, so she need not register. Her registered buyer will pay GST on her supply under reverse charge and issue a self invoice.
In short, the exemption from registration based on reverse charge is gone for these five items. Only the normal turnover threshold now decides whether the dealer must register.
What dealers and buyers should do
If you deal in any of these five items, add up your sales for this financial year. If you have already crossed the threshold, or will cross it soon, apply for GST registration now. Under Section 25(1), the application is due within 30 days from the date you become liable.
If you are a registered factory or recycler buying these items, ask every supplier for his GSTIN. For an unregistered supplier, keep a simple declaration that his turnover is below the limit, because you will be paying the tax under reverse charge on his supply. For a registered supplier, get ready to deduct TDS.
These changes are meant to bring the recycling trade, which has long run on cash and loose paper, into the tax net. For the honest small dealer, registration is not as frightening as it sounds, and it lets him sell to large buyers without trouble.
