TCS on scrap sales

Dear All, Hi. I have this query regarding TCS. We are currently in project and our production has not yet started. We are scrapping some of the waste. I need to know whether at this project stage, should we charge TCS from the purchaser?

Replies (8)

Yes. you have to collect the tax at source .

TCS provisions do not distinguish says nothing about when not to collect tax but says you have to collect and pay the taxes on scrap.

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.

At project stage does any manufacturing or mechanical working was carried on?

If not then since no manufacturing or mechanical working has started TCS will not apply
 

As per Sec. 206C(1), "Scrap" means waste and scrap from the manufacture or mechanical working of materials, which is definitely not usable as such because of breakage, cutting up, wear and other reasons.

So, TCS not applicable. Agree with Mr. Z . 

agreee with mr praveen

Well Mr.Z mechanical working does get carried out during project stage as there are lot of capital machineries getting installed and their functioning is done. Does this get included in mechanical working as per definition of Scrap Sale?

Mechanical working is to be done on material for the purpose of this section

Mechanical working on material means PHYSICAL operrations on a MATERIAL that deform / convert it into a desired shape, such as bending,cutting,drawing , grinding hammering ,rolling shaving twisting etc.

If such kind of mechanical working is done and scrap is generated from such activities which is definitely not usable as such because of breakage ,cutting up,wear and other reasons , then provisions of TCS shall apply

In my knowledge it has not been mentioned that activities of manufacturing or mechanical working of materials is not liable for TCS at planning stage

Therefore if above conditions are satisfied then in my knowledge provisions of TCS shall be applicable.

 

Thank you all ... for all your valuable feedback ... Mr.Z, your reply has cleared my doubts regarding TCS on Scrap ... thanks a lot ...

if scrap on other than manufacturing items means, wht to do??? for example scrap sale of old computers nd priters.. 

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