The 57th GST Council met on October 8, 2026, in New Delhi, chaired by the Union Finance Minister. It recommended applying the Reverse Charge Mechanism and a 2% Tax Deducted at Source to specified categories of waste and scrap. These measures aim to curb tax evasion in the unorganised recycling and scrap trade sector, where suppliers often operate outside the formal GST framework, making buyer-side tax compliance an effective enforcement tool.

The Reverse Charge Mechanism (RCM) under GST flips the usual tax liability: instead of the supplier paying tax to the government, the registered buyer pays it directly. This is deliberately applied to sectors where suppliers are typically small, unregistered, or informal — as is common in the scrap and waste recycling trade. By making the buyer liable, the government ensures tax is actually collected, since large registered buyers are easier to audit and monitor than hundreds of small scrap dealers.

The additional 2% TDS (Tax Deducted at Source) under GST (Section 51 of the CGST Act) means that specified buyers must deduct 2% of the taxable value at the time of payment and deposit it with the government. This creates a paper trail that helps tax authorities cross-verify transactions and detect suppressed turnover.

Together, RCM and TDS function as twin compliance enforcement tools for hard-to-tax informal sectors. Their extension to waste and scrap signals the government's intent to bring the recycling economy — a significant part of India's circular economy ambitions — under formal GST oversight.

For exam purposes, aspirants must understand that RCM is governed by Section 9(3) and 9(4) of the CGST Act, while GST-TDS is governed by Section 51. The GST Council is a constitutional body under Article 279A of the Indian Constitution.