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TCS on sale of scrap applicability

23 March 2023

one of our claint sale of scrap yearly turnover below 3 cr. is applicable tcs on every sales bill? pl. requires your valuable clear advice on it. what is the tax rate and attract turnover from which limit?

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12 Replies

Aakash Ramani (28 Points)
Replied 23 March 2023

TCS applicable only if T/o exceeds RS.10 CR in FY

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177713 Points)
Replied 23 March 2023

Yes, for your client having turnover of 3 Crs in preceding year, TCS collection is mandatory from the first bill itself. TCS rate on scrap is 1%. (refer Sec. 206C of IT act.)

1 Like

CA Rakesh Ishi (Working at Private Company) (8202 Points)
Replied 23 March 2023

As per the provisions of the Income Tax Act, Tax Collected at Source (TCS) is applicable on the sale of scrap if the turnover of the seller exceeds Rs. 10 crore in the preceding financial year. If the turnover of the seller is less than Rs. 10 crore, then TCS is not applicable on the sale of scrap.

Therefore, if the yearly turnover from the sale of scrap is below Rs. 10 crore, TCS is not applicable on every sales bill. However, if the turnover exceeds Rs. 10 crore in the preceding financial year, TCS will be applicable on the sale of scrap.

The applicable TCS rate on the sale of scrap is 1%

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177713 Points)
Replied 23 March 2023

The Explanation (c) to Section 206C defines ‘seller’ for the purposes of this Act, which includes-

The Central Government,
The state government,
Local authorities,
Corporation or authority formed under the central, state or provincial laws,
The company,
Firm,
Co-operative societies,
An individual or Hindu undivided family whose accounts come under tax auditing as per Section 44AB.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177713 Points)
Replied 23 March 2023

The Explanation (c) to Section 206C defines ‘seller’ for the purposes of this Act, which includes-

The Central Government,
The state government,
Local authorities,
Corporation or authority formed under the central, state or provincial laws,
The company,
Firm,
Co-operative societies,
An individual or Hindu undivided family whose accounts come under tax auditing as per Section 44AB.

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Ayush (Executive ) (6760 Points)
Replied 25 July 2023

In Section 206C of the Income Tax Act, "scrap" refers to the sale of discarded or waste material, and tax is collected at the source when such sales exceed a specified threshold.

TCS is applicable under Section 206C of the Income Tax Act.
TCS is levied at a rate of 1% on the sale of scrap.
If the seller's turnover exceeds Rs. 10 crore in the financial year preceding the sale, TCS becomes applicable on the sale of scrap.
If the turnover of the seller is less than Rs. 10 crore, TCS is not applicable on the sale of scrap.
TCS is collected by the seller at the time of sale and is deposited with the government.

2 Like

shanaaaaa10 (norton) (35 Points)
Replied 25 July 2023

1 Like

Prajjwal (*) (402 Points)
Replied 23 August 2023

TCS is levied at a 1% rate on scrap sales. If the seller's turnover in the previous financial year was over Rs. 10 crore, TCS applies; otherwise, it doesn't. The seller collects and deposits TCS with the government at the time of sale.

TCS Rate Chart

1 Like