This CBIC notification, No. 04/2026-Union Territory Tax (Rate), dated 27th October, 2026, amends the principal notification No. 4/2017-Union Territory Tax (Rate) to introduce a Reverse Charge Mechanism (RCM) for specific goods when supplied by an unregistered person to a registered person within Union Territories.
Key Statutory Clarifications & Analysis
1. Applicability & Compliance Framework
The amendment, effective from 1st November, 2026, expands the scope of RCM to 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).
2. Classification & Tax Rate Applicability
This measure aims to enhance tax compliance and bring informal sector transactions involving these goods under the GST net, particularly in the recycling and waste management sectors.
3. Export of Services & Rupee Realization
Registered recipients of these goods will now be responsible for paying the UTGST, shifting the compliance burden from potentially numerous unregistered suppliers.
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 persons purchasing used cooking oil from unregistered suppliers in UTs will now be liable to pay UTGST under RCM, increasing their compliance burden but potentially formalizing the supply chain.
- RCM extended to 'Waste and scrap of plastics' (HSN 3915) and 'Waste and scrap of tyres' (HSN 4004) under similar conditions.: Businesses involved in the recycling of plastics and tyres in UTs, if registered, will need to account for UTGST on their purchases of these scraps from unregistered vendors, ensuring tax collection at the recipient's end.
- RCM applied to 'Electrical and electronics waste and scrap' (HSN 8549) when supplied by an unregistered person to a registered person.: Registered recyclers or processors of e-waste in UTs will bear the UTGST liability on their procurement of e-waste from unregistered sources, streamlining tax collection in this growing sector.
- Effective date of these amendments is 1st November, 2026.: Taxpayers must update their accounting and compliance systems to reflect these RCM changes for transactions occurring on or after this date, ensuring timely and accurate UTGST payments.