New Tax Rules: Currently, TCS is being levied at the rate of one percent on motor vehicles priced above Rs 10 lakh from January 1, 2025.
There is useful news for taxpayers. Now you will have to pay 1% TCS (tax collected at source) on the purchase of luxury items like handbags, wristwatches, shoes, high-end sportswear and art objects worth more than Rs 10 lakh. Currently, TCS is being levied at the rate of one percent on motor vehicles worth more than Rs 10 lakh from January 1, 2025.
Notification of Income Tax Department
The Income Tax Department has notified the imposition of one per cent TCS on the sale of specified luxury goods exceeding Rs 10 lakh from April 22, 2025. TCS is collected from the buyer at the time of sale of specified goods and can be adjusted against the buyer’s tax liability while filing income tax returns.
Tax deduction at source does not generate any additional revenue, but it helps the tax department to detect high-value expenditure as PAN details have to be submitted at the time of purchase. The TCS provision for luxury goods and motor vehicles worth more than Rs 10 lakh was introduced in the Budget in July 2024 through the Finance Act, 2024.
Know what is the detail
The responsibility to collect TCS will be on the seller. This will apply to 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 horses for race or polo, etc.
Sandeep Jhunjhunwala, tax partner, Nangia Andersen LLP, said that this notification reflects the government’s intention to increase monitoring of high-value discretionary expenditure and strengthen audit in the luxury goods segment. This notification reflects the broader policy objective of expanding the tax base and promoting greater financial transparency.
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