TCS applicability on Manufacturing Scrap

[PAWAN KUMAR SHARMA]

We have received a notice from Income Tax department mentioning the TCS rate to be 2.2667 % whereas we have deducted it @ 1.113% under the category of Scrap. Kindly adivce what is covered in the definition of Scrap ?

[CAGOPALJI AGRAWAL]

The scrap has been defined by section 206C(11) explanation (b).

Scrap means waste and scrap from manufacturing or mechancial working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons.

[DEV KUMAR KOTHARI]

Dear Mr. P K Sharma,

Always give full facts, and your own observation while initiating discussions.

Your query is silent about type of material sold by you which required TCS,  the period of dispute, rates prevailing at that time etc.

The reason why you deducted a@ 1.113% and reason why the revenue is demanding @ 2.2667%

Please go through S. 206C, and find out applicable provision and rate of tax. You can find section and  section wise case laws on tmi.  Come with your results of studies so that further brain storming can take place in the Forum.

AI Summary

TCS on scrap: applicability and applicable rate contested; definition hinges on statutory explanation and transaction characterisation.
TCS on sale of manufacturing scrap is disputed due to differing rates; assessors must identify the material type, period and basis for rates and apply the statutory test that scrap means waste and scrap from manufacturing or mechanical working not usable as such because of breakage, cutting up, wear or similar reasons, and support the classification with documentary evidence.