Luxury goods above Rs 10 lakh like Louis Vuitton handbag, Bulgari jewellery etc. to attract TCS from January 1, 2025 The list of luxury goods that will attract TCS will be notified by the central government. Currently, TCS is applicable on foreign remittances, foreign travel, motor vehicle etc
Buying a luxury goods like Gucci Handbag, Birkin bag, Patek Philippe watches etc. will attract TCS from January 1, 2025 provided cost of the luxury goods exceeds Rs 10 lakh. As per the Budget memorandum, the government has proposed to bring the expenses made on luxury goods by the high net worth persons under the ambit of TCS (Tax collected at source) if cost of luxury goods is more than Rs 10 lakh.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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As per the memorandum, "It has been seen that there has been an increase in expenditure on luxury goods by high net worth persons. For proper tracking of such expenses and in order to widen and deepen the tax net, it is proposed to amend sub-section (1F) of section 206C to also levy TCS on any other goods of value exceeding ten lakh rupees, as may be notified by the Central Government in this behalf. Such goods would be in the nature of luxury goods."
Shalini Jain, Tax Partner, People Advisory Services, EY India says, "Government is proposing to impose a Tax Collected at Source (TCS) on luxury goods purchases over Rs 10 lakh to widen the tax base given the increase in spend on luxury items by HNIs. The list to luxury goods is yet to be notified by the government."
The TCS on luxury goods has been proposed to be imposed to widen the tax base. Currently, Sub-section 1F of the Section 206C provides that every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs 10 lakh, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent. of the sale consideration as income-tax.
Further, TCS on the foreign travel,foreign remittances has been hiked to 20% from 5% as well from October 1, 2023, except in certain cases. It also brought international credit card payments under LRS and imposed TCS on it.
As per the current laws, all overseas outward remittances (bank account transfer, foreign exchange, loading forex card), except for medical and educational purposes, made via Liberalised Remittance Scheme (LRS) now attract TCS at 20% if the amount is above Rs 7 lakh in a financial year. No TCS applies for forex transactions of below Rs 7 lakh, except in certain cases.
Under LRS, there will be no TCS on foreign remittances below Rs 7 lakh spent for educational expenses. If remittance above Rs 7 lakh spent for foreign education is through a loan obtained from an approved financial institution, it will attract TCS at 0.5%. Remittances above Rs 7 lakh spent for educational purposes from other sources will attract a TCS of 5%.
Similarly, any outward remittance for medical treatment will attract TCS at 5% if the threshold crosses Rs 7 lakh.
Do note that TCS is applicable at a concessional rate if you spend money for education or medical purposes abroad.
For an overseas tour package, a TCS of 5% is applicable if the amount is up to Rs 7 Lakh. Beyond this limit, a TCS of 20% is levied on a foreign tour package. #sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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This story originally appeared on: India Times - Author:Faqs of Insurances
