This CBIC Notification No. 04/2026-Integrated Tax (Rate), dated 27th October, 2026, amends the principal Notification No. 4/2017-Integrated Tax (Rate) to expand the scope of the Reverse Charge Mechanism (RCM) under the Integrated Goods and Services Tax (IGST) Act, 2017.
Key Statutory Clarifications & Analysis
1. Export of Services & Rupee Realization
The amendment specifically inserts four new categories of goods into the RCM framework when supplied by an unregistered person to a registered person.
2. Classification & Tax Rate Applicability
These categories include 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).
3. Applicability & Compliance Framework
This change is effective from November 1, 2026.
4. Export of Services & Rupee Realization
The primary implication for registered taxpayers is the shift in GST liability from the supplier to the recipient for these specific goods, requiring them to account for and pay IGST on such procurements from unregistered vendors.
5. Classification & Tax Rate Applicability
This measure aims to enhance tax compliance, particularly in sectors dealing with waste and scrap materials, and to formalize transactions involving these goods.
Procedural Changes & Compliance Impact
- Insertion of 'Used cooking oil' (HSN 1518) under RCM when supplied by an unregistered person to a registered person.: Registered recipients purchasing used cooking oil from unregistered suppliers must now pay IGST under RCM, shifting the tax liability and compliance burden to the buyer.
- Insertion of 'Waste and scrap of plastics' (HSN 3915) under RCM when supplied by an unregistered person to a registered person.: Businesses dealing in plastic waste and scrap will need to ensure registered buyers account for IGST under RCM when procuring from unregistered vendors, impacting cash flow and compliance processes for buyers.
- Insertion of 'Waste and scrap of tyres' (HSN 4004) under RCM when supplied by an unregistered person to a registered person.: The tyre recycling industry and other registered entities purchasing tyre waste from unregistered sources will now be responsible for paying IGST under RCM, necessitating adjustments in their procurement and tax accounting.
- Insertion of 'Electrical and electronics waste and scrap' (HSN 8549) under RCM when supplied by an unregistered person to a registered person.: Registered recyclers or processors of e-waste will bear the IGST liability under RCM for purchases from unregistered suppliers, formalizing the tax treatment of transactions in the e-waste sector.