Tcs
This query is : Resolved
09 August 2018
We are a Trader ,purchasing rejected sheet from a Can manufacturer. They charged from us 1% TCS. Should we also charged TCS from our customers to whom we supplied material as it is ? Can we claim the TCS
10 August 2018
selling scrap is liable for TCS.. @1%.. you can claim tcs paid by you.
10 August 2018
IF TRADER HAS NOT CHARGED AND DEPOSIT TCS, HOW SHOULD IT DISCLOSED IN TAX AUDIT REPORT
26 July 2025
### Here's how to handle **TCS (Tax Collected at Source)** in your case as a **trader of scrap/rejected sheet**:
---
## ✅ **1. Applicability of TCS on Traders**
You mentioned:
* You **purchased rejected sheets (scrap)** and were charged **1% TCS** by the manufacturer.
* You **sell this material as-is** (no manufacturing).
### ➤ **Are you liable to collect TCS while selling it?**
As per **Section 206C(1)** of the Income Tax Act:
> *Only the seller of specified goods* (like scrap, coal, minerals, etc.) is required to **collect TCS** at prescribed rates, **provided the seller is not a trader/reseller**.
🚫 **You are a trader** (reseller), **not a manufacturer or processor** — so **TCS is not applicable** on you when you sell **as-is**.
🔹 **CBDT Circular No. 22/2017** clarifies:
> TCS provisions are not applicable to traders who **merely trade in goods** without carrying out any manufacturing or processing activity.
---
## ✅ **2. Can you claim TCS charged by your supplier?**
Yes.
The **1% TCS** collected from you by the manufacturer and deposited against your PAN will:
* Reflect in **Form 26AS / AIS**
* Be available as **credit while filing income tax return**
* Can be claimed against your **final tax liability**
---
## ✅ **3. If TCS not collected by you — How to disclose in Tax Audit Report (Form 3CD)?**
If you're **not liable to collect TCS** (being a trader), but the question is:
> What if you **should have collected TCS** but **didn't**?
Then, your tax auditor must **report this non-compliance** under:
### 🔸 **Clause 34(b) of Form 3CD**:
> "Whether the assessee is required to collect tax under 206C, if yes, furnish details whether collected and deposited or not."
Your auditor should mention:
* Nature of goods (scrap)
* That you’re a **trader** (not liable as per Circular 22/2017)
* No TCS was collected
* Reason: **Not liable under law**
If, however, you **were liable but failed** to collect TCS, then:
* It must be reported as **non-compliance**
* You may face **interest under Section 206C(7)** and **penalty under 271CA**
---
## ✅ Summary:
| Question | Answer |
| -------------------------------------- | ------------------------------------------------------------------ |
| Should you collect TCS as a trader? | ❌ No, not applicable to traders (as per CBDT Circular) |
| Can you claim TCS collected by seller? | ✅ Yes, credit available in ITR |
| How to report non-collection in audit? | ✅ Under Form 3CD, Clause 34(b), with reasons for non-applicability |
Let me know if you want a **draft format for Clause 34(b) disclosure** or **help claiming TCS in your return**.
---
## ✅ **1. Applicability of TCS on Traders**
You mentioned:
* You **purchased rejected sheets (scrap)** and were charged **1% TCS** by the manufacturer.
* You **sell this material as-is** (no manufacturing).
### ➤ **Are you liable to collect TCS while selling it?**
As per **Section 206C(1)** of the Income Tax Act:
> *Only the seller of specified goods* (like scrap, coal, minerals, etc.) is required to **collect TCS** at prescribed rates, **provided the seller is not a trader/reseller**.
🚫 **You are a trader** (reseller), **not a manufacturer or processor** — so **TCS is not applicable** on you when you sell **as-is**.
🔹 **CBDT Circular No. 22/2017** clarifies:
> TCS provisions are not applicable to traders who **merely trade in goods** without carrying out any manufacturing or processing activity.
---
## ✅ **2. Can you claim TCS charged by your supplier?**
Yes.
The **1% TCS** collected from you by the manufacturer and deposited against your PAN will:
* Reflect in **Form 26AS / AIS**
* Be available as **credit while filing income tax return**
* Can be claimed against your **final tax liability**
---
## ✅ **3. If TCS not collected by you — How to disclose in Tax Audit Report (Form 3CD)?**
If you're **not liable to collect TCS** (being a trader), but the question is:
> What if you **should have collected TCS** but **didn't**?
Then, your tax auditor must **report this non-compliance** under:
### 🔸 **Clause 34(b) of Form 3CD**:
> "Whether the assessee is required to collect tax under 206C, if yes, furnish details whether collected and deposited or not."
Your auditor should mention:
* Nature of goods (scrap)
* That you’re a **trader** (not liable as per Circular 22/2017)
* No TCS was collected
* Reason: **Not liable under law**
If, however, you **were liable but failed** to collect TCS, then:
* It must be reported as **non-compliance**
* You may face **interest under Section 206C(7)** and **penalty under 271CA**
---
## ✅ Summary:
| Question | Answer |
| -------------------------------------- | ------------------------------------------------------------------ |
| Should you collect TCS as a trader? | ❌ No, not applicable to traders (as per CBDT Circular) |
| Can you claim TCS collected by seller? | ✅ Yes, credit available in ITR |
| How to report non-collection in audit? | ✅ Under Form 3CD, Clause 34(b), with reasons for non-applicability |
Let me know if you want a **draft format for Clause 34(b) disclosure** or **help claiming TCS in your return**.
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