26 July 2025
Regarding **TCS applicability on sale of scrap of a machine**, here’s what you need to know:
---
### 1. **TCS Applicability on Sale of Scrap**
* Under **Section 206C(1H)** (introduced from 1 October 2020), TCS @ 0.1% (or 1% earlier for certain scrap) is applicable on sale of goods, including scrap, if:
* The **total sale consideration in a financial year exceeds ₹50 lakh**. * The buyer is **liable to deduct TDS under any section** (e.g., a company or a person deducting TDS).
* Earlier, **Section 206C(1)(ix)** mandated TCS @1% on sale of scrap by the seller.
* **So, if the seller is a registered person (e.g., company) selling scrap, TCS @1% is applicable on scrap sales** irrespective of whether the scrap amount has been written off or not from Asset account.
---
### 2. **Whether TCS is to be collected even if scrap sale value is not written off**
* Yes, TCS is applicable on **actual sale proceeds** received from sale of scrap, regardless of whether the asset account has been written off or not.
* Accounting treatment (writing off asset or not) does not affect tax liability to collect TCS.
---
### 3. **Practical Implication**
* If your company sells scrap machine parts or scrap material exceeding ₹50 lakh in aggregate in a year, it must collect TCS @1% on scrap sales from the buyer.
* TCS collected should be deposited with the government and reflected in Form 26AS for the buyer.
---
### 4. **Summary**
| Aspect | Explanation | | --------------------------- | ------------------------------------------------ | | TCS Applicability | Yes, on scrap sale exceeding ₹50 lakh/year | | Rate | 1% (earlier) or 0.1% (Section 206C(1H)) | | Accounting write-off impact | No impact; TCS applies on actual sale value | | Compliance | Must collect TCS, deposit, and issue certificate |
CAclubindia
