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Dhimant Bhatt

Mumbai , Sept. 8

THE Union Government has again put off its decision on collection of 10 per cent tax at source (TCS) on non-ferrous metal scrap, trade sources have said. The implementation of this levy, perceived by the trade to have adverse impact, had earlier been kept in abeyance till August 31.

"We are waiting for a formal notification. Officials told us that the TCS levied on metal scrap has been postponed, till further notice," a director of the Bombay Metal Exchange (BME) said.

According to him, metal scrap material was brought under the purview of TCS on the basis of an amendment under Section 206 C of the Income Tax Act. As per this mandate, establishments dealing in non-ferrous scrap have to collect 10 per cent as tax effective June 1, 2003.

The source of scrap metal is three-fold, through direct import, local resale and scrap generated by industrial undertakings, including electricity boards, telephone nigams, railways. Such scrap sale is generally done through Government auctions or tenders.

"This amendment has serious repercussions on the trade, non-ferrous scrap is an industrial raw material, its consumption mainly by small scale industries spread all over the country," Mr Ashok Bafna, President, BME, said.

The small trader is the link who plays an important part by supplying this scrap as per requirements, on credit basis, for the manufacture of various types of articles and goods. He makes a marginal profit of 1 to 2 per cent, which is not much taking into account the nature of the business, Mr Bafna said, highlighting the impact of the proposed TCS.

" The aggregate trade volume of metal scrap in Mumbai is around 3,000-4,000 tonnes per month and the effect of TCS on the metals trade is many times over," Mr Sharad Parikh, ex-president, BME said.

"Non-ferrous metal scrap is recycled and treated as major industrial raw material. It is of high value, prices ranging from Rs 80 per kg to Rs. 150 per kg. Major portion of scrap is being imported. Given the current tough competition, the margin of profit on imports is hardly 2 per cent," a leading scrap importer said, adding the new levy will jeopardise the smooth operation that was being conducted all these years.

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