The 57th Goods and Services Tax Council has proposed a 2% tax deducted at source (TDS) on specified waste and scrap transactions, along with a reverse charge mechanism (RCM) for purchases from unregistered suppliers. The recommendations would bring plastic waste, discarded tyres, electrical and electronic scrap, and used cooking oil under a compliance framework similar to the one introduced for metal scrap.
The proposed rules, detailed in frequently asked questions issued by the finance ministry, would require registered buyers to deduct TDS when purchasing specified scrap from registered suppliers. When buying from unregistered sellers, registered businesses would have to pay GST under the RCM, even if those sellers fall below the normal GST registration threshold.
The measures follow the compliance framework introduced for metal scrap after the 54th GST Council meeting. By extending similar treatment to additional waste streams, the Council is seeking to create a more consistent tax-monitoring system across parts of the recycling chain.
The framework is significant for urban waste markets because these materials move through multiple stages before reaching recyclers and processors. Plastic, used tyres, electronic waste and used cooking oil are routinely collected, aggregated and sold through networks that include registered businesses as well as smaller unregistered suppliers. The proposed TDS and RCM provisions would place additional reporting and tax-payment responsibilities on registered buyers dealing with these suppliers.
The proposal does not cover every waste transaction. It specifically identifies plastic waste, discarded tyres, electrical and electronic scrap, and used cooking oil. The available finance ministry clarification describes the measures as recommendations of the GST Council; the supplied material does not establish a final implementation date or provide details of the applicable notification process.
The Council also recommended several clarifications on the tax treatment of other products. Seaweed-extract biostimulants registered under the Fertiliser Control Order, 1985, would be classified as fertilisers under HSN heading 3101, while products containing plant growth regulators would not receive the same concession. Sublimation paper has been classified under heading 4809.
For the automobile trade, second-hand car dealers would be able to use the concessional GST margin scheme while claiming input tax credit on eligible business inputs, including repair and maintenance services and spare parts. Input tax credit on the purchase of second-hand vehicles themselves would not be permitted when the margin scheme is used.
The Council also recommended aligning the GST treatment of retreaded tractor tyres with that of new tractor tyres. It clarified that toy-related rate entries cover other products under Customs Tariff heading 9503, including dolls and puzzles, and proposed a separate nil-rate entry for psyllium seeds, whether fresh, chilled, frozen or dried.
Past disputes involving eligible seaweed-based biostimulants and sublimation paper are proposed to be regularised on an “as is where is” basis. Further implementation details would depend on the formal tax notifications and clarifications that follow the Council’s recommendations.
