CMA Final · Direct Tax Laws and International Taxation · Collection, Recovery and Refund of Tax
Under the Income-tax Act, 2025, the rate of tax collected at source by a seller on the sale of scrap (Sl. No. 4 of the Table in section 394(1)) is:
The seller collects tax at source at 2% on the sale of scrap. The Table in section 394(1) fixes this rate, which replaced the earlier 1% from 1 April 2026. So the one percent option reflects the superseded rate.
- A1%
- B2%Correct
- C5%
- D20%
Explanation
The Table in section 394(1) prescribes 2% for the sale of scrap, substituted for the earlier 1% with effect from 1-4-2026. The 1% option is the old rate, which no longer applies. The 5% and 20% rates relate to other items or earlier provisions.
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