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1% TCS on Luxury Goods Over ₹10 Lakh (Effective April 22, 2025)

The Income Tax Department has implemented a new rule effective from April 22, 2025, mandating a 1% Tax Collected at Source (TCS) on the sale of luxury goods priced above ₹10 lakh. This measure, introduced under Section 206C of the Income Tax Act, aims to bring greater transparency in high-end retail transactions and promote tax compliance.

Key Highlights of the New Rule

  • Effective Date: April 22, 2025
  • Legislation: Section 206C of the Income Tax Act
  • Announced In: Finance Act, Union Budget
  • Objective: To monitor high-value spending and ensure a better audit trail in the luxury goods segment.

Goods Covered Under 1% TCS Rule

Sellers must collect 1% TCS on these luxury items if the sale price exceeds ₹10 lakh,

  • Luxury wristwatches
  • High-end handbags and sunglasses
  • Designer footwear and premium sportswear
  • Paintings, sculptures, antiques
  • Collectibles like rare coins and stamps
  • Private yachts and helicopters
  • Advanced home theatre systems
  • Horses for racing or polo

Example Calculation

  • If you purchase luxury goods worth ₹30 lakh:
  • TCS to be collected = 1% of ₹30 lakh = ₹30,000
  • The seller collects and deposits this amount against your PAN

Claiming TCS While Filing ITR

  • TCS appears in Form 26AS (linked to PAN).
  • This amount can be claimed as a tax credit while filing your Income Tax Return (ITR).
  • If your final tax liability is less than the collected TCS, you are eligible for a refund—similar to how TDS on salary works.

Compliance Expectation

Sellers must,

  • Collect 1% TCS on applicable sales.
  • Deposit it on time under the buyer’s PAN.
  • Maintain detailed records for audit.

Buyers should

  • Ensure accurate KYC details (PAN).
  • Keep purchase invoices.
  • Claim TCS while filing ITR.
Summary/Static Details
Why in the news? 1% TCS on Luxury Goods Over ₹10 Lakh (Effective April 22, 2025)
Rule 1% TCS on luxury goods above ₹10 lakh
Applicable Law Section 206C, Income Tax Act
Announced In Finance Act, Union Budget
Objective Boost audit trail & tax compliance
Covered Items Watches, handbags, footwear, yachts, etc.
Minimum Price Threshold ₹10 lakh
Tax Rate 1% of sale value
Collected By Seller
1% TCS on Luxury Goods Over ₹10 Lakh (Effective April 22, 2025)_4.1

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