Pay new income tax TCS of 1% on these luxury goods above Rs 10 lakh; CBDT issues notification The TCS will be levied on the purchase of luxury goods. Know the new TCS rules on buying luxury goods like Omega watches, Birkin bags, etc
The Central Board of Direct Taxes (CBDT) has issued a notification specifying the list of luxury goods on which tax collected at source (TCS) will be levied. The CBDT has issued two notifications in this regard. The first notification deals with the nature of luxury goods, while the second one deals with the tax rate and threshold purchase amount above which tax will be levied.#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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It was a long-awaited notification, as the TCS on luxury goods was announced in the July 2024 Budget. The Budget 2024 memorandum stated that the TCS on luxury goods will be applicable from January 1, 2025. However, there was no notification in this regard to date.
The notifications issued on April 22, 2025, state that the new rules take effect from the date of publication. Hence, from April 22, 22025, the tax will be collected from the mentioned luxury goods.
Luxury goods on which TCS will be levied
Following is the list of luxury goods on which tax will be collected by the seller as per the notification:Any wrist watchAny art piece, such as antiques, paintings and sculpturesAny collectibles such as coins, stampAny yacht, rowing boat, canoe, helicopterAny pair of sunglassesAny bag such as handbag, purseAny pair of shoesAny sportswear and equipment such as golf kit, ski wearAny home theatre systemAny horse for horse racing in race clubs and a horse for polo
The TCS on the above-mentioned luxury goods items will be levied if the amount paid exceeds the specified amount. The tax will be levied under Section 206C of the Income Tax Act.
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Threshold over which TCS will be levied on luxury goods
It is important to note that TCS will be levied if the amount spent on buying the goods exceeds Rs 10 lakh. Hence, if you buy a wristwatch, say, an Omega, which costs more than Rs 10 lakh, then the seller will collect tax from you on the purchase of the wristwatch.Similarly, tax will be collected by the seller if you buy a home theatre system that costs more than Rs 10 lakh.
Currently, TCS is levied on the sale of a motor vehicle of whose value exceeds Rs 10 lakh.
Tax rate for TCS on luxury goods
The tax will be collected at a rate of 1% of the sale amount. This means that if you buy any specified luxury goods items that cost, say, Rs 30 lakh, then the seller will collect Rs 30,000 as tax on the sale from the buyer.
TCS can be used to claim tax credit in ITR filing
Once the TCS is collected from the buyer, it is the seller's duty to deposit the same against the buyer’s PAN. Once the tax is deposited against the buyer’s PAN, the buyer can use it to claim a tax credit and pay a lower tax in the ITR filing. It is the same way that an employer deducts TDS from salary and deposits it against the employee’s PAN. In case your net tax liability is less than the TCS amount you can claim a refund in your ITR.The buyer should collect the TCS certificate from the seller once the tax is deposited against the buyer’s PAN.
What the government said on levying TCS on luxury goods
As per the Budget 2024 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."Current applicability of TCS
Prior to notification on TCS on luxury goods, the TCS is applicable on buying a motor vehicle of more than Rs 10 lakh, TCS on foreign travel and foreign remittances and overseas tour packages.#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;}
This story originally appeared on: India Times - Author:Faqs of Insurances
