New Delhi, Apr 23: Luxury goods like handbags, wrist watches, footwear and sportswear, priced above Rs 10 lakh will now attract a 1 per cent Tax Collected at Source (TCS).
The income tax department has notified the applicability of TCS at the rate of 1 per cent on sale of specified luxury goods, where the selling price exceeds Rs 10 lakh with effect from April 22, 2025.
The TCS provision for luxury goods was introduced via Finance Act, 2024, as part of the Budget presented in July, 2024.
The obligation to collect TCS shall be on the seller in respect of the notified goods such as wrist watch, art objects such as paintings, sculptures, and antiques, collectible items including coins and stamps, yachts, helicopters, luxury handbags, sunglasses, footwear, high-end sportswear and equipment, home theatre systems, and horses intended for racing or polo.
Nangia Andersen LLP Tax Partner Sandeep Jhunjhunwala, said this notification operationalises the government’s intent to enhance monitoring of high-value discretionary expenditure and strengthen the audit trail in the luxury goods segment.
It reflects a broader policy objective of expanding the tax base and promoting greater financial transparency.
“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.
“Although the luxury goods sector may undergo some transitional challenges, this measure is expected to promote formalisation and improved regulatory oversight over time,” Jhunjhunwala added. (PTI)
