TCS Tax: There is a big update for everyone. Luxury goods such as handbags, wristwatches, shoes and sportswear worth more than Rs 10 lakh will now attract one per cent tax collection at source (TCS). The Income Tax Department has issued a notification regarding levying TCS at the rate of 1 per cent on the sale of luxury goods from April 22, 2025. This will apply to those items where the sale value exceeds Rs 10 lakh. The imposition of TCS on luxury goods under the Finance Act, 2024 was announced in the July 2024 budget.
The responsibility of paying TCS lies with the seller, who collects it from the customers. This tax will be applicable on notified goods such as wristwatches, art objects such as paintings, sculptures and antiques, collectibles such as coins and stamps, yachts, helicopters, luxury handbags, sunglasses, shoes, high-end sports apparel and equipment, home theater systems and racing or polo horses etc.
According to Sandeep Jhunjhunwala, tax partner, Nangia Andersen LLP, this notification has been issued as part of the government’s intention to increase monitoring of high-value items and strengthen the audit trail in the luxury goods segment. This reflects the broader policy objective of expanding the tax base and promoting greater financial transparency.
He said that sellers will now have to ensure timely compliance of TCS provisions. At the same time, buyers of notified luxury goods will have to face more KYC requirements and documentation while purchasing such things.
Jhunjhunwala also said, “Although the decision may pose some challenges for the luxury goods sector, it is expected to lead to better regulatory oversight.”