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Luxury goods like handbags, wrist watches, footwear, and sportswear, priced above ₹10 lakh will now attract a 1% tax collected at source (TCS).
The Income Tax Department has notified the applicability of TCS at the rate of 1% on sale of specified luxury goods, where the selling price exceeds Rs.10 lakh with effect from April 22, 2025.
The Central Board of Direct Taxes on April 22 has notified a list of 10 items where, if their value exceeds Rs.10 lakh, there will be a 1 per cent tax collected at source. The list includes wrist watches, art pieces such as antiques, paintings, sculptures, collectables like coins and stamps, sunglasses, handbags and purses, shoes, sportwear and equipment such as golf kits, home theatre systems and horses for racing and polo.
TCS is collected from the buyer at the time of sale of specified goods and can be adjusted against the tax liability of the purchaser at the time of filing of IT returns. TCS helps trace high-value spending as PAN details have to be submitted at the time of purchase.
The 1 per cent TCS comes into effect from April 22. Already, under Section 206C(1F) of the IT Act, introduced as part of the Budget presented in July, 2024, TCS of 1 per cent rate is being levied on motor vehicles costing above Rs.10 lakh effective January 1, 2025.
The section also mandates a 1 per cent TCS on any other goods, as may be specified by the government by notification in the official gazette. These items have now been specified.
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