TCS or TDS

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This discussion clarifies the application of Tax Collected at Source (TCS) and Tax Deducted at Source (TDS) on scrap sales. Generally, TCS under Section 206C(1) applies to scrap sales, making Section 206C(1H) inapplicable. While Section 194Q (TDS) has similarities to 206C(1H), the key point is that if TCS is collected under other provisions (like 206C(1)), TDS under 194Q is not applicable. Therefore, for scrap sales, TCS should be collected, and Section 194Q does not apply.

Gopal Bhosle

Gopal Bhosle (Querist)
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01 August 2022 Sir,

We are charging TCS on Scrap (Paper ) sales @1% u/s 206 . Now the buyer saying that his turnover exceeds 10 cr , he will deducts TDS u/s194Q and No need to charge TCS. Is it acceptable or not ?

Plz reply

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 August 2022 1. Since sale of scrap is covered u/s. 206C(1), the provisions of Section 206C (1H) shall not apply.
2. No liability under section 194Q if TDS is deducted under any other provisions or TCS is collectible except u/s 206C(1H).
Hence, for sale of scrap TCS should be collected and Sec 194Q will not be applicable.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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01 August 2022 This TDS section 194Q is very similar to TCS section 206C(1H). However both these sections are mutually exclusive i.e. if one section becomes applicable the other will not apply.
As per section 206C(1H), TCS will not be applicable if buyer is liable to deduct TDS under any other provisions of the Act. On the contrary, section 194Q does not create any such exception for the transactions on which tax is collectible under section 206C(1H).
The provisions of Section 194Q supersedes Section 206C(1H) and imposes primary liability on buyer to deduct tax.

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