Section 206C-TCS on sale of scrap etc.


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Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in the Table below, a sum equal to the percentage, specified in the corresponding entry in the said Table, of such amount as income-tax.
Summary of Section 206C (1) of the Income Tax Act
  • Collector: Specified person being a seller (Defined below)
  • Buyer: Specified person being a buyer (Defined below)
  • Threshold Limit: Any amount
  • Rate of TCS:
S. No. Nature of Goods Rate
(i) Alcoholic Liquor for human consumption 1%
(ii) Tendu leaves 5%
(iii) Timber obtained under a forest lease 2.5%
(iv) Timber obtained by any mode other than under a forest lease 2.5%
(v) Any other forest produce not being timber or tendu leaves 2.5%
(vi) Scrap 1%
(vii) Minerals, being coal or lignite or iron ore 1%

 

  • Point to be Noted:
    • “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;
    • TCS would not be collected if the buyer purchases the specified goods for personal consumption.
    • TCS is to be collected If the buyer purchases the goods (mentioned in the above table) for the purpose of trading.
    • No TCS would be collected If the buyer purchases the goods for the purpose of manufacturing, processing or producing articles or things or for the purpose of the generation of power. Following condition should be kept in mind:
      • Buyer should be resident in India and
      • Buyer give the declaration in writing in duplicate in the prescribed form and verified in prescribed manner to the seller
      • The person responsible for collecting TCS under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration on or before the 7th day of the month next following the month in which the declaration is furnished to him.
  • Time of collection:

Collector/Seller is required to collect TCS within earlier of the following dates:

    • At the time of debiting of the amount payable by the buyer to the account of the buyer or
    • At the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode
  • Buyer means for the purpose of section 206C (1):

Buyer” means a person who obtains in any sale, by way of auction/tender/any other mode, specified goods but does not include, —

    • a public sector company,
    • the Central Government,
    • a State Government, and
    • an embassy,
    • a High Commission,
    • legation,
    • commission, consulate and the trade representation of a foreign State and
    • a club; or
    • a buyer in the retail sale of such goods purchased by him for personal consumption
  • Seller means for the purpose of section 206C (1):

“Seller” means

    • the Central Government,
    • a State Government or
    • any local authority or
    • corporation or authority established by or under a Central, State or Provincial Act, or
    • any company or
    • firm or
    • co-operative society and
    • Individual or a Hindu undivided family whose total sales/gross receipts/ turnover exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which the goods of the nature specified in the Table are sold.

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