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