TCS on Scrap

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CA Vishal kapoor (Querist)
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11 December 2010 Hi,
I want to know that is there any limit mentioned under the Income Tax Act for deducting TCS on sale of Scrap.

Suppose A firm sold a scrap of empty boxes which is used for packing to a waste purchaser(Kabadia).
Now i want to know whether there is any liability on the part of the company to deduct TCS out of Sale proceeds.The company/Firm which i am taking about manufacture cloth from yarn & there is no Excise Duty applicable on that Firm/Company.
Sale of Scrap is about 40000-50000 per year.

Kindly Help

Thanks
Vishal

Balakrishnan

Balakrishnan (Expert)
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12 December 2010 TCS is not applicable on sale of waste packing materials. As such there is no exemption limit also to collect TCS.

Ravi Shankar

Ravi Shankar (Expert)
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12 December 2010 Mr Vishal, I think it would still be 'safe' to collect tax on the sale of empty boxes sold as scrap. Please note that 'scrap' has a wide meaning and is relative to one's business. Hence, I would suggest that the company collected tax at source (TCS) notwithstanding the purpose of usage of the buyer.

All it matters is that you have sold it as scrap! Whether the buyer uses the same again as packing material or for any other purpose is immaterial.

There is no threshold limit for TCS like you have in TDS.

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Balakrishnan

Balakrishnan (Expert)
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12 December 2010 The Act specifically exempts packing materials, hence it is not with respect to useage by the buyer. Hence no TCS is applicable

Dayal

Dayal (Expert)
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13 March 2013 I agree with Mr. Balakrishnan.

Refer the citiation
IN THE INCOME TAX APPELLATE TRIBUNAL
‘B’ BENCH – AHMEDABAD
(BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL, AM)
ITA No.1213 and 1214/Ahd/2010
A. Y.: 2009-10 and 2010-11
Navine Fluorine International Ltd. v.The A. C. I. T., TDS Circle

Which clarifies that TCS is not applicable on waste and scrap of packing material which is not an outcome of Manufacturing.