This CBIC Notification No. 07/2026-Central Tax, dated October 27, 2026, amends Notification No. 50/2018-Central Tax, which deals with the applicability of the Reverse Charge Mechanism (RCM) under the Central Goods and Services Tax (CGST) Act, 2017.
Key Statutory Clarifications & Analysis
Point 1
The primary purpose of this amendment is to expand the scope of RCM to include specific categories of waste and scrap goods when supplied by one registered person to another registered person.
2. Applicability & Compliance Framework
This change is effective from November 1, 2026.
Point 3
The amendment substitutes clause (d) of the principal notification, mandating that the recipient of these specified goods, rather than the supplier, will be liable to pay GST.
Point 4
The newly added items include used cooking oil, waste and scrap of plastics, waste and scrap of tyres, various metal scraps, and electrical and electronics waste and scrap.
5. Export of Services & Rupee Realization
This move aims to enhance tax compliance and streamline revenue collection in sectors dealing with these specific waste materials, potentially addressing issues of unregistered suppliers or difficulties in collecting tax from fragmented supply chains.
Point 6
Taxpayers involved in the trade or processing of these materials will need to adjust their GST compliance procedures accordingly.
Procedural Changes & Compliance Impact
- Expansion of Reverse Charge Mechanism (RCM) applicability to specific waste and scrap goods.: Registered recipients of used cooking oil, plastic waste, tyre waste, metal scrap (Chapters 72-81), and e-waste from other registered persons will now be liable to pay GST under RCM. This shifts the tax payment responsibility from the supplier to the recipient, requiring changes in accounting and compliance processes for affected businesses.
- Substitution of clause (d) in Notification No. 50/2018-Central Tax.: The amendment formally incorporates five new categories of goods under RCM when supplied between registered persons. This clarifies the legal obligation for specific waste and scrap materials, ensuring consistent application of RCM across these sectors.
- Inclusion of 'used cooking oil falling under heading 1518' under RCM.: Businesses purchasing used cooking oil from other registered entities will now be responsible for paying the GST. This could impact the restaurant industry, biofuel producers, and other processors of used cooking oil, requiring them to account for GST on their purchases.
- Inclusion of 'waste and scrap of plastics (3915)', 'waste and scrap of tyres (4004)', 'metal scrap (Chapters 72-81)', and 'electrical and electronics waste and scrap (8549)' under RCM.: Recyclers, manufacturers using recycled materials, and traders dealing in these specific types of industrial and consumer waste will now be subject to RCM. This will necessitate adjustments in their input tax credit claims and payment mechanisms, potentially improving tax collection efficiency in these often informal or semi-formal sectors.
- Effective date of November 1, 2026.: Businesses must ensure their systems and processes are updated to comply with the new RCM provisions for these goods by the effective date. Failure to do so could lead to penalties for non-compliance with GST regulations.