The Income Tax Department has introduced a new rule.
Now, a one percent Tax Collected at Source (TCS) will be applied on luxury items like handbags, wristwatches, shoes, and sportswear priced above ₹10 lakh.
So, if you’re buying such expensive luxury products, you will now have to pay more tax than before.
From April 22, 2025, this 1% TCS will be applicable on the sale of certain luxury goods if the value exceeds ₹10 lakh.
This provision was introduced through the Finance Act, 2024, as part of the Union Budget announced in July 2024.
Seller Responsible for Collecting TCS
According to the new rule, the responsibility to collect the TCS lies with the seller of these luxury goods.
The notified items include: wristwatches, art objects like paintings, sculptures, and antiques; collectibles such as rare coins and stamps; and high-end items.
High end items like:
- yachts,
- helicopters,
- designer handbags,
- sunglasses,
- luxury footwear,
- premium sportswear and sports equipment,
- home theatre systems,
- and even racing or polo horses.
Why Did the Government Make This Change?
Sandeep Jhunjhunwala, a tax partner at Nangia Andersen LLP, explained that the government’s aim is to better monitor high-value, non-essential spending and improve the audit process in the luxury goods sector.
This move also supports the broader goal of expanding the tax base and encouraging greater financial transparency.
