Starting April 22, 2025, the Indian Income Tax Department has implemented a 1% Tax Collected at Source (TCS) on the purchase of high-value luxury goods priced above ₹10 lakh. This measure aims to enhance tax transparency and monitor high-value discretionary spending.
Luxury Items Subject to 1% TCS
As per the official notification, the following luxury items will attract a 1% TCS if their sale price exceeds ₹10 lakh:
- Luxury handbags
- Wristwatches
- Footwear and high-end sportswear
- Designer sunglasses
- Art pieces (paintings, sculptures, antiques)
- Collectibles (coins, stamps)
- Yachts and helicopters
- Race or polo horses
- Home theatre systemsSME Futures
Previously, motor vehicles priced above ₹10 lakh were already under the TCS net. The Economic Times
How TCS Works
- Collection: The seller collects 1% of the sale price as TCS at the time of purchase.
- Tax Credit: This amount is credited against the buyer’s total income tax liability when filing returns.
- Documentation: Buyers must provide their Permanent Account Number (PAN) during the transaction.
- Example: For a luxury handbag priced at ₹12 lakh, the seller will collect ₹12,000 as TCS.The Economic Times
Buyers are advised to keep invoices, PAN details, and TCS certificates handy for smooth tax filing.
Implications for Buyers
- Increased KYC Requirements: Expect more stringent Know Your Customer (KYC) procedures at luxury outlets.
- Tax Credit Visibility: TCS will reflect in Form 26AS (tax credit statement).
- Record Keeping: Maintain purchase receipts for reference during tax filing.
This initiative is part of the government’s broader effort to formalize the economy and ensure financial transparency, especially in sectors where cash transactions and unreported income have been prevalent.
Source (full link):
https://www.business-standard.com/finance/personal-finance/watches-art-bags-sportswear-over-rs-10-lakh-say-hello-to-1-tcs-125042400134_1.html
Disclaimer: This article is not authored or drafted by any employee of FinMen Advisors. The information presented is entirely sourced from the above news link. FinMen Advisors is not responsible for the accuracy, completeness, or reliability of the information.
