The seller collects 2% TCS on the sale of scrap from 1 April 2026 (FY 2026-27) under Section 394 of the Income-tax Act 2025, up from 1% under old Section 206C(1). No threshold. Pick the period, enter the sale value, get the tax to collect. Other categories are on the TCS rate and threshold calculator.
Under the TCS provision, 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. Metal offcuts, turnings and worn parts sold as waste fit; finished goods sold second-hand do not.
The seller of scrap collects tax at source from the buyer. The rate was 1% under Section 206C(1) of the Income-tax Act 1961 and is 2% from 1 April 2026 under Section 394(1) of the Income-tax Act 2025, following the Finance Act 2026 rationalisation. There is no minimum threshold: it applies from the first rupee.
Collection happens at the earlier of debiting the buyer's account or receiving payment from the buyer. TCS = sale value x rate. If the buyer does not furnish a valid PAN or Aadhaar, the rate is the higher of twice the normal rate or 5%.
Rates are those reported by TaxGuru and ClearTax on the Finance Act 2026 changes and are consistent with this site's TCS rate and threshold calculator. Whether a particular buyer is exempt from collection (for example under a declaration for manufacturing use) is not modelled; confirm against the Act text.
A manufacturer sells factory scrap for ₹5,00,000 to a buyer with a valid PAN, after 1 April 2026.
