TCS on sale of scrap applicability

Yes, for your client having turnover of 3 Crs in preceding year, TCS collection is mandatory from the first bill itself. TCS rate on scrap is 1%. (refer Sec. 206C of IT act.)

As per the provisions of the Income Tax Act, Tax Collected at Source (TCS) is applicable on the sale of scrap if the turnover of the seller exceeds Rs. 10 crore in the preceding financial year. If the turnover of the seller is less than Rs. 10 crore, then TCS is not applicable on the sale of scrap.

Therefore, if the yearly turnover from the sale of scrap is below Rs. 10 crore, TCS is not applicable on every sales bill. However, if the turnover exceeds Rs. 10 crore in the preceding financial year, TCS will be applicable on the sale of scrap.

The applicable TCS rate on the sale of scrap is 1%

The Explanation (c) to Section 206C defines ‘seller’ for the purposes of this Act, which includes-

1. The Central Government, 
2. The state government, 
3. Local authorities,
4. Corporation or authority formed under the central, state or provincial laws,
5. The company, 
6. Firm, 
7. Co-operative societies,
8. An individual or Hindu undivided family whose accounts come under tax auditing as per Section 44AB.  

The Explanation (c) to Section 206C defines ‘seller’ for the purposes of this Act, which includes-

1. The Central Government, 
2. The state government, 
3. Local authorities,
4. Corporation or authority formed under the central, state or provincial laws,
5. The company, 
6. Firm, 
7. Co-operative societies,
8. An individual or Hindu undivided family whose accounts come under tax auditing as per Section 44AB.  

In Section 206C of the Income Tax Act, "scrap" refers to the sale of discarded or waste material, and tax is collected at the source when such sales exceed a specified threshold.

• TCS is applicable under Section 206C of the Income Tax Act.
• TCS is levied at a rate of 1% on the sale of scrap.
• If the seller's turnover exceeds Rs. 10 crore in the financial year preceding the sale, TCS becomes applicable on the sale of scrap.
• If the turnover of the seller is less than Rs. 10 crore, TCS is not applicable on the sale of scrap.
• TCS is collected by the seller at the time of sale and is deposited with the government.

As per the provisions of the Income Tax Act, Tax Collected at Source (TCS) is applicable on the sale of scrap if the turnover of the seller exceeds Rs. 10 crore in the preceding financial year. If the turnover of the seller is less than Rs. 10 crore, then TCS is not applicable on the sale of scrap.

 

TCS is levied at a 1% rate on scrap sales. If the seller's turnover in the previous financial year was over Rs. 10 crore, TCS applies; otherwise, it doesn't. The seller collects and deposits TCS with the government at the time of sale.

TCS Rate Chart

What is the GST rate for scrapped goods for Non GST holders.

What is the GST rate for scrapped goods for Non GST holders.

yes you still fall under gst but youll not have ITC claim. What is the product of scrap please

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