13 March 2013
our company is in fertilizer industry and use various type of catalyst for chemical reaction. After that such scrap catalyst sold to vendor. which recover copper etc. precious metal from it.
my concern is whether such sale will cover under TCS. please help and thanks in advance.
29 March 2013
Explanation (b) to Sec. 206 c of the Income Tax Act, 1961 provides that "Scrap" means waste and scrap from the manufacturing or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reaseons.
From the above it can be concluded that : (a) waste or scrap arising from packing materialss, newspapers , old machinry scrapped etc. which cannot be said to arise from manufacturing ; or (b) by products generated from the manufacturing process as the same could be used as such.
It can be inferred that, n case of sale of scrap the provision would apply to only those sellers who are engaged in the business of manufacturing or mechanical working of materials.
Thus, if in your case the scrap is not out of the manufacturing operation , then the provision of TCS would not be applicable . otherwise TCS @1% is to be collected on the sale of scrap.
CAclubindia
