TCS on Scrap

Hi Vineet, I also agree with Mr Imran.  TCS is not be collected by a dealer from a dealer.  He is very much right in emphasing that TCS is applicable only when it is sold as scrap obtained as a result of any manufacturing activity.  Further your last answer it self answers your querry, You would see TCS is to be collected from a buyer and a buyer who is buying scrap from "further sale of such goods" is exempted from levy as per the definition of buyer provided by you.  A dealer would definitely be buying it in further sale as the original buyer must have suffered levy of TCS from the source (manufacturer) from whome he had purchased the scarp.

Mr Chugh

Thanks for your comments and observation but I think you missed the point I wanted to drive home. The exemption to buyer in secon sale has been done away with by Direct Tax  Amendmend Act, 2003 and now only buyers in retail sale for personal consumption are exempted from TCS. So legislation makes it more clear that TCS is applicable in case of traders of scrap also.

 

Coming to the case law cited above and other decision of Rajkot ITAT Bench in Nathulal P Lavti case (ITA 1167-1170/2010) dated 17-6-2011, you will notice that ITAT has never held against leviability of TCS in case of traders of scrap. It is only the nature of underlying traded items, which were held as not falling under the definition of "Scrap" and hence TCS not aplicable.

 

So once traded goods are "Scrap" as defined in Act and sold to "Buyer" except those specifically exempted, TCS provisions are applicable in case of traders also.

The company is going to sell Packing material scrap which is generated out of its purchase of raw material which it uses for production. please Suggest whether company has to apply TCS on this sale or not?

 

TCS apply to sale of 'brass scarp' imported by the trader;

Meaning of scrap not restricted to one arising only from manufacture or mechanical operations;

Sec 206C provisions also apply to business of trading in scrap;

TCS provisions also apply to retail sale, reject's assessee's narrow interpretation of the term 'buyer'; However, relief under first proviso to sub-section (6A) of Sec 206C, as introduced by Finance Act, 2012 available, if the taxes paid by buyer; The amended beneficial proviso applicable retrospectively :

 

ITAT Special Bench : Rajkot

 

Bharti Auto Products

 

HI, If the Seller is a manufacturing company, and the scrap is sold from Company's Retail Store.

TCS will be applicable???

 

Regards

Amit Kumar

Yes, the Seller should Deduct TCS 1% On Sale of Scrap.

Refer the Below Link which Gives 'Each and Everything about TCS & gives all TCS related Complaines' & This Link will give all the Info on TCS mechanism of Income Tax Act, 1961- Link:https://www.exploreincometax.com/Income-tax-Ready-Reckoners/tcs-rates-tcs-compliances