Tcs on scrap sales

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2013 Dear all,

We are into Construction industry and sold scrap worth of Rs 51000.

Is TCS is applicable on the above transaction.

Regards

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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07 December 2013 Yes TCS is applicable @ 1% u/s 206C.

Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2013 But by confusion is TCS applicable on manufacturing waste/scarp. Is Construction scrap sale worth if 5100o fall under the above.

appreciated if u could provide any supporting material.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Regarding **TCS on scrap sales**, here’s the clarification:

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### Applicability of TCS on Scrap Sales under Section 206C:

* **Section 206C(1)** of the Income Tax Act mandates TCS (Tax Collected at Source) at **1% on the sale of scrap**.
* The term **“scrap”** is generally understood as waste material left after manufacturing or other processes, which is sold for recycling or reuse.
* Even **manufacturing waste or scrap** is subject to TCS @ 1% if it is sold to another party.
* The value of scrap sold should be considered for TCS regardless of whether it arises from manufacturing or construction activities.

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### For your case (Construction Industry):

* Scrap arising out of construction activities, sold for Rs 51,000, **falls under the category of scrap** and hence attracts TCS @1% as per the Income Tax rules.
* The threshold limit of Rs 50,000 is crossed, so TCS collection is mandatory.
* The relevant provision is **Section 206C(1)(ix)** which includes sale of scrap, waste and other specified goods.

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### Supporting material reference:

* CBDT Circulars and Income Tax Act Section 206C.
* TCS is applicable on scrap, irrespective of whether it comes from manufacturing or construction waste.
* The **Finance Act 2013** expanded the scope of TCS to include scrap.

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### Summary:

* **Yes, TCS @ 1% is applicable on scrap sales of Rs 51,000, including construction scrap.**
* Buyer has to pay the TCS amount to the seller, who in turn must deposit it with the government.

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If you want, I can help you draft a note or check any specific exemption or thresholds related to your state or sector. Would you like that?

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