By the Scrap Bhai team · Updated 13 November 2026
Quick answer
India has no single “Scrap licence”. Most Scrap traders need: GST registration (above the turnover limit or for inter-state sales), Udyam registration, a municipal trade licence or Shop and Establishment registration, and in some states police or local junk-dealer registration. Add Pollution Control Board consent if you process material, and follow special rules for e-waste, batteries and vehicles.
There is no single Scrap licence
People search for a “Scrap licence”, but there is no one government licence that covers the whole trade. What you need depends on what you handle (iron, paper, e-waste, batteries, vehicles), what you do with it (only buy and sell, or also cut, melt and process), how big you are and your state and city. Put together the right set of registrations below, and confirm the local ones with your municipal office and a CA.
Registrations most traders need
| Registration | Who needs it | Where |
|---|---|---|
| PAN and a current account | Everyone, to run business money cleanly | Income tax department and your bank |
| Udyam registration | Not compulsory, but very useful for loans and MSME benefits. Free | Udyam portal, with Aadhaar and PAN |
| Trade licence | Shops and godowns in cities and towns, where the local body requires it | Municipal corporation, council or panchayat |
| Shop and Establishment | Shops and godowns, especially with staff | State labour department |
| GST registration | Above the turnover limit (₹40 lakh a year for goods in most states, lower in some), and for any inter-state sale | GST portal, free |
| Police or junk-dealer registration | Required in some states and cities to control stolen goods | Local police station or city office |
| Weighing scale verification | Every scale used in trade must be verified and stamped | State legal metrology department |
| Pollution Control Board consent | Units that cut, shred, melt, bale at scale or process | State Pollution Control Board |
| Fire safety | Larger godowns storing paper, plastic or other burnable material | Local fire department |
Extra rules for special materials
- E-waste: under the E-Waste (Management) Rules, 2022, e-waste must reach registered recyclers or refurbishers, who register on the CPCB EPR portal. A trader who collects e-waste should sell only to registered recyclers. Read the e-waste business guide.
- Batteries: under the Battery Waste Management Rules, 2022, waste batteries must go to registered recyclers and refurbishers. Breaking batteries or draining acid yourself is dangerous and not allowed.
- Hazardous waste: used oil, chemical drums and similar material fall under the Hazardous and Other Wastes Rules, 2016 and need authorised handling.
- Old vehicles: scrapping a registered vehicle is done only at a Registered Vehicle Scrapping Facility (RVSF), registered with the state transport department under the 2021 vehicle scrapping rules.
- Government and PSU auctions: to bid in e-auctions of government and PSU Scrap, register as a buyer on the MSTC e-auction platform.
- Import and export: you need an Importer Exporter Code (IEC) from DGFT, and imported metal Scrap must follow DGFT rules, including pre-shipment inspection.
The order to do it in
- Get your PAN and open a current account in the business name.
- Finalise the shop or godown and get the rent agreement and owner’s NOC.
- Do Udyam registration online. Scrap trading generally falls under NIC group 4669 (wholesale of waste and scrap).
- Apply for the trade licence and Shop and Establishment registration as your city requires.
- Take GST registration if you cross the limit, sell outside your state or deal with buyers who need GST bills.
- Check police or junk-dealer registration at your local police station.
- Get your weighing scale stamped by legal metrology.
- Before any processing, apply for Pollution Control Board consent.
Documents to keep ready
- PAN and Aadhaar of the owner or partners, and passport-size photos.
- Proof of the business address: rent agreement with the owner’s NOC, or ownership papers, and a recent electricity bill.
- Bank details: a cancelled cheque or bank statement of the current account.
- For a partnership, LLP or company: the deed or incorporation documents.
- Photos of the shop or godown, with the name board, which some offices ask for.
Stay clear of stolen material
The strongest licence will not protect you if you buy stolen material. Ask for the seller’s ID and address for bulk or unusual lots, keep bills and weight slips, and refuse material like new cables, manhole covers, railway parts or vehicle parts without papers. शक हो तो माल न लें।
With registrations in place, see how tax works on every deal: GST on Scrap: rates, HSN codes, RCM and TDS.
Start your Scrap business with Scrap Bhai
The Scrap Bhai Scrap Business Course guides you through all of this, step by step, in short Hindi lessons: material identification, rates, buying, selling, fraud safety and a weekly live doubt session. For rates, training and a network together, see the Scrap Business Franchise.
Common questions
Is a licence required for a Scrap business in India?
There is no single national Scrap licence. A Scrap trader usually needs GST registration (above the turnover limit or for inter-state sales), Udyam registration, a municipal trade licence or Shop and Establishment registration, and in some states police or local junk-dealer registration. Processing units, e-waste and batteries have extra rules.
Do I need a licence to buy kabadi?
For a small kabadi shop, the usual needs are a local trade or shop licence and, depending on your state and city, registration or verification with the local police. GST registration becomes compulsory above the turnover limit. Ask your municipal office and local police station what applies in your area.
Can I run a Scrap business without GST?
You can, if your turnover stays below the limit for your state and you only sell within your state. In practice many big buyers prefer GST-registered sellers, and inter-state sales need GST registration whatever your turnover.
What is the NIC code for a Scrap business?
Scrap trading generally falls under NIC group 4669, wholesale of waste and scrap. In the Udyam form, search for scrap and choose the 5-digit code that best matches what you do.
Do I need pollution control board permission?
If you only buy, sort and sell clean material, the requirement is usually light. If you cut, shred, melt, bale at scale, dismantle e-waste or handle hazardous material, you will need consent from your State Pollution Control Board. Check with the board before you set up.
This guide is general information, not legal, tax or investment advice. Rules and rates change, so confirm the details with a CA or your local office before you act.