Tax collected at source on sale of scrap

Dear Rohit,

TCS is applicable in following case only

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

In your case its applicable in 6 th point hence you shall collect  the TCS though you invoice from the scrap buyer. same shall be remitted as you do for TDS.

And you can certify the same  by issueing form 27D. 

AGREE WITH ABOVE

Thanks for the prompt response Valji and Srinivasa. 

I endorse your view.

But, my only doubt is whether tax can be collected if manufacturing has not been carried out by the company itself since the Income Tax Act does not specify or elaborate such a situation. 

I admit that if the company was itself manufacturing the garments and selling the scrap resulting therefrom, tax would have to be collected at source at 1% without any doubt.

However, can it be argued that since the company has not actually manufactured the garments, the question of sale of scrap arising therefrom will not arise? 

Also, the company could treat it as seconds sales/sale of defective goods instead of sale of scrap and thereby avoid collecting tax at source on such sale. Would this treatment be tenable?

Thanks. 

Hi,

    I have a doubt about TCS ( Tax Collection at Source ). I want to know rate of Tcs on Scrap Paper.

If any body know please reply to me.