This CBIC Notification No. 04/2026-Central Tax (Rate), dated 27th October 2026, significantly amends Notification No. 4/2017-Central Tax (Rate) by expanding the scope of the Reverse Charge Mechanism (RCM) under Section 9(3) of the CGST Act, 2017.
Key Statutory Clarifications & Analysis
1. Export of Services & Rupee Realization
The amendment introduces several new categories of goods where the recipient, if registered, will be liable to pay GST when procuring these goods from an unregistered person.
2. Classification & Tax Rate Applicability
Specifically, it brings 'Used cooking oil' (HSN 1518), 'Waste and scrap of plastics' (HSN 3915), 'Waste and scrap of tyres' (HSN 4004), and 'Electrical and electronics waste and scrap' (HSN 8549) under the RCM ambit.
3. Applicability & Compliance Framework
This change is effective from 1st November 2026.
4. Objective & Uniformity of Implementation
The primary objective appears to be to formalize the taxation of these specific waste and scrap materials, ensuring tax collection even when the supplier is unregistered, and to promote compliance within the recycling and waste management sectors.
5. Taxpayers
Particularly registered businesses dealing in these materials, must adjust their compliance procedures to account for the RCM liability.
Procedural Changes & Compliance Impact
- Introduction of Reverse Charge Mechanism (RCM) for 'Used cooking oil' (HSN 1518) when supplied by an unregistered person to a registered person.: Registered businesses purchasing used cooking oil from unregistered suppliers will now be liable to pay GST under RCM, increasing their compliance burden and cash outflow for tax payments.
- RCM extended to 'Waste and scrap of plastics' (HSN 3915) and 'Waste and scrap of tyres' (HSN 4004) when supplied by an unregistered person to a registered person.: Recycling units and manufacturers using these materials as inputs, if registered, must now account for GST under RCM on purchases from unregistered suppliers, impacting their input tax credit flow and compliance.
- RCM applied to 'Electrical and electronics waste and scrap' (HSN 8549) when supplied by an unregistered person to a registered person.: E-waste recyclers and processors, if registered, will bear the GST liability under RCM for their procurement of e-waste from unregistered individuals or entities, necessitating changes in their procurement and accounting processes.
- Effective date of these amendments is 1st November 2026.: Taxpayers have a short window to update their accounting systems, procurement policies, and compliance procedures to incorporate these new RCM liabilities before the effective date.