Source :NEWS18 NEWS
Last Updated:April 28, 2025, 09:54 IST
In a notification issued by the Income Tax Department on April 22, a 1 percent Tax Collected at Source (TCS) will apply to luxury items that cost more than Rs 10 lakh.
The seller will be responsible for collecting this 1% TCS on luxury goods from the buyer at the time of receiving payment.
Sportswear, handbags, wristwatches, and footwear priced above ₹10 lakh will now attract a 1% tax collected at source (TCS). The income tax department outlined the affected categories in a notification issued on April 22, 2025.
While TCS is not expected to generate significant additional revenue, the move aims to strengthen the department’s ability to track high-value transactions, as Permanent Account Number (PAN) details are mandatory at the time of purchase. Buyers who file their income tax returns can claim credit for the TCS paid against their final tax liability.
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Check the list of luxury goods under the 1% TCS that cost more than Rs 10 lakh.
- Accessories: Sunglasses, shoes, handbags, and wrist watches.
- Transportation: Helicopter, yachts, rowing boat, and canoe.
- Art pieces: Antiques, paintings, and sculptures.
- Collectables: Stamps and coins.
- Sports gear: Ski-wear and golf kits.
- Home theatre system
- Horses for polo games and racing.
As part of the July Union Budget last year, the Finance Act 2024 established a provision for luxury items and cars that cost more than Rs 10 lakh. According to tax experts, the move will increase openness and close the loop on discretionary spending.
Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP, told PTI that the notification strengthens the government’s objective of closely monitoring high-value discretionary spending and improving the audit trail within the luxury goods segment.
“Sellers will now be required to ensure timely compliance with TCS provisions, while buyers of notified luxury goods may experience enhanced KYC requirements and documentation at the time of purchase,” Jhunjhunwala told PTI.
He went on to say that while the industry would face some transitional difficulties, formalisation and better regulatory monitoring are anticipated as a result of this action.
What It Means: 1% TCS Will Be Attracted by Items Over Rs 10 Lakh
An additional 1 per cent TCS will be applied to the purchase of luxury goods costing Rs 10 lakh or above. The goal is to increase the number of taxpayers and guarantee accurate income disclosures, not to raise more money.
It is thought that many business owners and professionals underreport their income to evade taxes. The government is now paying more attention to high-value transactions to verify tax returns with real purchases and encourage people to amend their tax returns appropriately.
- Location :
Delhi, India, India
SOURCE : NEWS 18
