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TCS SCRAP SALE

05 May 2010

Hello to Everyone

I have a query to you, we are a sugar manufacturer company.Sometimes we sell scrap. Our scrap includes M.S. Scrap, pipes, Elcetric cables, HSD Drums etc..I want to ask, whether it is mandatory for us to deduct TCS on srap sale. And if we do not deduct what can be the consequnces and also i like to know,is there any way to avoid the deduction of TCS. I ll be waiting of ur kind reply.These Scrap is not arising from manufacturing process

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5 Replies

CA Shiv (Business Controller) (2987 Points)
Replied 05 May 2010

yes you need to dedcut TCS from sale of such scrap. its compulsory. If you dont do than provisions and penalty will apply.

Penalty for failure to collect tax at source.

271CA. (1) If any person fails to collect the whole or any part of the tax as required by or under the provisions of Chapter XVII-BB, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to collect as aforesaid.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.]

Conclusion: so if any any person fail to deduct tax collection at source (TCS) or deposit the same to govt. treasury then he will be “assessee in default and provision of sec.271ca is appliable w.e.f. 01-04-2007.

If there is amendment pls let me know.

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Radhika (CA Final) (194 Points)
Replied 05 May 2010

A small correction in ur question. TCS is tax collected at source. so thrs nothing to be deducted. and coming to ur point... Definition of Scrap U/s.206C:Scrap means waste and scrap from the manufacture or mechanical working of material which is definitely not usable as such because of breakage ,cutting up,wear and other reasons. So, Tax need not be collected since the scrap u have mentioned are not covered by the provisions of Sec.206c

CA Shiv (Business Controller) (2987 Points)
Replied 05 May 2010

may be... just check whether it is covered in scrap definition or not..

NAWAL MAHESHWARI (GM (Finance and Accounts)) (25 Points)
Replied 08 June 2012

we are mfg of tmt steel bars and our raw material is ingots and billets during mfg process will have lots of scrap from ingots and billets. just we wanted to know at the time of sale of this scrap we have to deduct tcs or not.

Member (Management) (325 Points)
Replied 10 June 2012

You dont "deduct" TCS, you "collect" it from the purchaser. That is a basic difference. As far MS scrap is concerned, it is liable for TCS since it is by product of manufacturing. If the other products can also be established as being a by product of manufacturing, then they too are liable for TCS, else not.