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scrap battery sale with vat or tcs

Rajnish Kumar (Asst. Manager - Accounts) (25 Points)

20 August 2010

we have to sold scrap battery, but we are not sure to add VAT or TCS

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9 Replies

CA Ankur Mittal (Assistant Manager @ Reliance Communication) (759 Points)
Replied 20 August 2010

See i am writing the provisions you can go through it can check whether you are liable to deduct tcs or not ...bcoz ur information is incomplete

Who is Seller?:
following persons are covered under the scope of the seller for TCS purpose

The Central And State Government.
Local authority
Statutory corporation or Authority
Company
Firm
Co-operative society
Individual or Hindu undivided family(HUF) if covered under section 44AB (mandatory Audit)

Who is Buyer ?

Buyer Means a person who obtains in any sale,by way of auction,tender or any other mode,specified goods ,or right to receive any such goods
but does not include

Public sector company,
Central/state Government,
Embassy,a high commission,legation,consulate and the trade representation of a foreign state and
A club
A buyer in the retail sale of such goods purchased for personal consumption

so goods purchased by consumers are not covered under TCS

Specified Goods

Alcoholic Liquor for human consumption
Tendu Leaves
Timber obtained under a forest lease
Timber obtained by any other mode
Any other forest produce not being a Timber or tendu leave:forest produce means grown spontaneously,though a latter stage human efforts are required /applied in order to extract the resultant product.TCS is applicable on Forest produce and not on agriculture produce.
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.

When tax has to be collected.

Tax(TCS) has to be collected at the time of debiting of the amount payable to buyer or at the time of receipt of payment,which ever is earlier.

Tax Rate

Alcoholic Liquor for human consumption:one percent(1%)
Tendu Leaves(five percent,5%)
Timber obtained under a forest lease:(two and half percent,2.5 %)
Timber obtained by any other mode:(two and half percent,2.5 %)
Any other forest produce not being a Timber or tendu leave::(two and half percent,2.5 %)
Scrap::one percent(1%)

plus surcharge(if applicable) 10 %on basic rate given above
plus education cess 2 % on basic plus surcharge
plus secondary and higher education cess 1 % on basic plus surcharge amount

Tax collection at lower rate

A buyer can apply to his Assessing Officer in Form 13 for tax collection at lower rate.
on receiving application on Form 13 ,Assessing officer ,if satisfied,may issue such certificate directly to seller under advice to the buyer.This rates is applicable for a specific seller,who's name is given in the certificate and not applicable as blanket approval for purchase of specified goods from any body.

Exemption/Nil rate.

No tax will be deducted from a buyer who purchases specified goods not for the purpose of trading but for the manufacturing,processing,or production of goods/article or thing.
In this case Buyer gives a declaration, for above use, in duplicate in Form 27C to the seller.
The seller shall deliver one copy ,form 27C collected from buyer, to Chief Commissioner/ Commissioner of Income tax .

Tax deduction & collection Account Number:(TDCAN better known as TAN)

Every person collecting tax (TCS) at source shall apply in form 49B to the assessing officer.TAn(tax deduction account ) issued after 1.10.2004 are combined for TDS as well as TCS
TDCAN/TAN should be written on all challan,return and TDS/TCS certificate issued .
penalty for failure to obtain TDCAN is 10000 Rs.No penalty shall be imposed on the person if he proves that there was reasonable cause for the failure.
If a person quote wrong Tan on a document where tan required to be quoted ,penalty may be imposed of rs 10000 u/s 273B for each occasion on which the default occurs.No penalty shall be imposed on the person if he proves that there was reasonable cause for the failure.

Deposit of Tax:

Tax collected at source shall be deposited within one week from the last day of the month in which collection is made.
To deposit TCS challan number 281 is to filled the same form is used for TDS also.

Issue of Tax collection certificate to Buyer.

The certificate shall be issued to the buyer on Form 27D with in one month from the end of the month during which amount is collected from the buyer.
Consolidated form 27D may be issued for 6 months for transaction upto 30 September by 31 October and upto march 31 by April 30th on request from the buyer.

Return

The seller who has collected and deposited the TCS has to file a quarterly return on form 27EQ by 15july,15september,15january,30April for respective quarters

Return on computer media(e TCS return) following person are required to file mandatory return on computer media known as e-TCS return.other person may filled their return on manual basic.

if collector is a company or
a person who's accounts are required to be audited u/s 44AB in immediately proceeding Financial year or
where any quarterly return filled by the person in the immediately proceeding year has collector entries of more than or equal to fifty.

2 Like

Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8310 Points)
Replied 20 August 2010

Thanks.............

(Guest)

Thanks.............

Rajnish Kumar (Asst. Manager - Accounts) (25 Points)
Replied 20 August 2010

We are pvt ltd company, manufacturing LPG HOZE pipe factory at Baddi (H.P). & HO in Delhi

we are selling waste material at factory like small peice of B.C.Wire,carbon black rubber pcs scrap

dealer is re-selling water material to another. please suggest Tax applicable VAT OR TCS

Also we have at HO having some UPS discarded battery. what is applicable.

Regards

Rajnish kumar

sudhakar ca cwa (service) (1518 Points)
Replied 20 August 2010

from SCRAP definition

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.

sale of used battery is not covered

so TCS is not applicable.

sudhakar ca cwa (service) (1518 Points)
Replied 20 August 2010

we are selling waste material at factory like small peice of B.C.Wire,carbon black rubber pcs scrap.

if these things comes from manufacture process then TCS is applicable. tell me the process clearly it is useful to explain it better

CA Ankur Mittal (Assistant Manager @ Reliance Communication) (759 Points)
Replied 20 August 2010

if your scrap like B.c. wire etc originates from manufacturing or mechanical working and they are not directly usable then it wil be subject to TCS otherwise they are excisable if excise is applicable...

Now two things to consider that are importants is

1. whether you Scrap orignate from either from manufacturing or mechanical working or not

2. whether they are directly usable or not . you can ask the scrap dealer regarding this

Now if excise is applicable on your process/company/firm then considering the abovew point come to your conclusion

correct me if i am wrong ( for Expericened CCites)

CA Navin Jain (MANAGER (FINANCE & ACCOUNTS)) (11768 Points)
Replied 20 August 2010

Dear All

if scrap generated during the manufacturing the product then following law will be appilicable

Excise and Vat

If manufacturing company has taken CANVAT Credit of Excise and Vat on Raw material then Excise and vat would be cahrged on the sale of scrap.

TCS

TCS would be appilicabe on the sale of scrap but there is exemption limit if following condition is satisfied

No tax will be deducted from a buyer who purchases specified goods not for the purpose of trading but for the manufacturing,processing,or production of goods/article or thing.
In this case Buyer gives a declaration, for above use, in duplicate in Form 27C to the seller.

surajit mitra (SERVICE) (191 Points)
Replied 09 June 2017

A buyer can apply to his Assessing Officer in Form 13 for tax collection at lower rate.On receiving application on Form 13

GST will be charged over full value of scrap sold. not over TCS collected. While calculating TCS on scrap sales, is it for the sale amount only of for Sale amount and VAT in aggregate? Eg. Sales Rs. 100 VAT Rs. 10 So TCS @ 1% is on Rs. 100 or Rs. 110.

Sscrap like B.c. wire etc originates from manufacturing or mechanical working and they are not directly usable then it wil be subject to TCS otherwise they are excisable if excise is applicable...Now two things to consider that are importants is 1. whether you Scrap orignate from either from manufacturing or mechanical working or not 2. whether they are directly usable or not . you can ask the scrap dealer regarding this Now if excise is applicable on your process/company/firm then considering the abovew point come to your conclusion.