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Withdraw TCS on scrap: PHDCCI
New Delhi, June 02: PHDCCI today urged the government to withdraw tax collection at source (TCS) on scrap or reduce it to 0.5-1 per cent from the present ten per cent.
New Delhi, June 02: PHDCCI today urged the government to withdraw tax collection at source (TCS) on scrap or reduce it to 0.5-1 per cent from the present ten per cent.
"The rate of ten per cent tax on sales value is very high in general and much higher than profit margin on the sales value of the goods," the chamber said in a statement.
Manufactured scrap passes through long chain of tenders and each of them play on wafer thin margins of about 1-2 per cent, it said, adding, TCS at the rate of ten per cent would block the working capital of assessees and increase input cost and cost of trading.
Most scrap dealers have meagre turnover and little margins and treat the payment of tax as part of their cost when it has to be borne by the manufacturer as increased cost of scrap, it said.
Since TCS was introduced to curb tax evasion on contracts, tenders and auctions and was not intended to be made applicable on imports, the government should have clarified that imported scrap would not be included in the TCS, it said.
The chamber also sought clarification on whether the general scrap, which is not part of the manufacturing process of the industry such as broken and discarded machine, burnt oil and reusable packaging is covered under TCS.
The threshold limit should be made to Rs 10 lakh per contract, it said, adding, a system should be created for transaction-based assessments and monthly refunds. Bureau Report
"The rate of ten per cent tax on sales value is very high in general and much higher than profit margin on the sales value of the goods," the chamber said in a statement.
Manufactured scrap passes through long chain of tenders and each of them play on wafer thin margins of about 1-2 per cent, it said, adding, TCS at the rate of ten per cent would block the working capital of assessees and increase input cost and cost of trading.
Most scrap dealers have meagre turnover and little margins and treat the payment of tax as part of their cost when it has to be borne by the manufacturer as increased cost of scrap, it said.
Since TCS was introduced to curb tax evasion on contracts, tenders and auctions and was not intended to be made applicable on imports, the government should have clarified that imported scrap would not be included in the TCS, it said.
The chamber also sought clarification on whether the general scrap, which is not part of the manufacturing process of the industry such as broken and discarded machine, burnt oil and reusable packaging is covered under TCS.
The threshold limit should be made to Rs 10 lakh per contract, it said, adding, a system should be created for transaction-based assessments and monthly refunds. Bureau Report