The government has revised the Scrap Supplier GST Rules with effect from 1 November 2026. Under these new rules, businesses selling specified scrap items can no longer skip getting a GST Registration. However, this also does not mean every small scrap trader has to get GST Registration right away.
What Changed Under the GST Registration Rules for Scrap Suppliers?
Generally, a seller collects GST from the customer and deposits it with the tax department.
For certain scrap items, the government applies the Reverse Charge Mechanism (RCM). This means the buyer directly deposits the GST with the government instead of the seller.
Earlier, an exemption allowed small suppliers to operate without a GST Registration if their buyers were paying 100% of the tax under reverse charge.
- Metal scrap dealers lost this benefit in October 2024.
- Now, the updated Scrap Supplier GST Rules have extended this rule to cover several other scrap categories as well.
Which Scrap Items Fall Under the GST Registration Rules for Scrap Suppliers?
The updated GST Registration Rules for Scrap Suppliers apply to businesses supplying:
- Used cooking oil
- Plastic waste and scrap
- Tyre waste and scrap
- Metal scrap
- Electrical and electronic waste and scrap (e-waste)
Important Note: Always check your item’s official HSN code before reaching a conclusion. Not every item called “kabad” or “scrap” requires a GST Registration under these specific categories.
How Do the GST Registration Rules for Scrap Suppliers Impact Your Business?
If you deal in any of the items listed above, you must follow the updated Scrap Supplier GST Rules once your sales grow.
Now, you need GST Registration but it also depends on your aggregate turnover:
- Sales below the threshold limit: The updated GST Registration Rules for Scrap Suppliers do not force you to register.
- Sales above the threshold limit: You must apply for a GST Registration, even if your buyers pay all the tax under reverse charge.
What Is the Turnover Limit for GST Registration for Scrap Suppliers?
For most traders supplying only goods, the standard threshold limit to apply for a GST Registration is ₹40 lakh in aggregate annual turnover. However, under the GST Registration Rules for Scrap Suppliers, this limit can vary depending on your state and exact business nature. You should consult a CA to know whether you need GST Registration for supplying scrap as per your own unique business scenario.
Can an Unregistered Seller Supply Buyers Without a GST Registration?
Yes. If your total turnover is below the prescribed limit, you can still operate your business without a GST Registration. When a registered buyer purchases scrap from you, they will pay the GST directly to the government under reverse charge.
Furthermore, the buyer’s liability to pay tax does not automatically mean a small seller must take a mandatory GST Registration under the GST Registration Rules for Scrap Suppliers.
Summary of Responsibilities Under GST Registration Rules for Scrap Suppliers
| Party | Primary Responsibility |
| Supplier (Seller) | Check total turnover to see if taking a GST Registration is mandatory. |
| Buyer | Check if reverse charge rules require depositing GST directly with the department, irrespective of the seller’s GST Registration status. |
Practical Steps to Comply With GST Registration Rules for Scrap Suppliers
To ensure your business remains fully compliant with the latest GST Registration Rules for Scrap Suppliers, you must do the following:
- Verify your goods: Check if your items fall under the 5 waste categories affected by the GST Registration updates.
- Calculate your total turnover: Total up all your sales bills for the current financial year to check against GST Registration limits.
- Check your state threshold: Confirm the exact sales limit applicable for GST Registration in your state.
- Review special conditions: Ensure no other GST provision compels your business to take an early registration.
- Consult your CA or Tax Advocate: Get professional advice to confirm whether you require a GST Registration under the new GST Registration Rules for Scrap Suppliers, why it is needed, and from which date your liability starts.
Moreover, if you want any other guidance relating to GST Registration Rules for Scrap Suppliers , please feel free to talk to our business advisors at 8881-069-069.
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