Categories: Current AffairsEconomy

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