Luxury Goods Over ₹10 Lakh to Attract 1% TCS Starting April 22, 2025

Affluent shoppers in India will soon pay a little more for their indulgences. The Central Board of Direct Taxes (CBDT) has announced that, effective April 22, 2025, a 1% Tax Collected at Source (TCS) will apply to luxury purchases exceeding ₹10 lakh. Introduced under the Finance Act, 2024, this move targets high-value consumption and aims to tighten financial compliance.

What Does It Mean for Buyers?
Purchases of items like high-end watches, yachts, and luxury fashion will now come with an additional 1% tax at the time of sale. For instance, a ₹30 lakh luxury item will now cost ₹30,000 more due to the new TCS.

Items Falling Under the TCS Rule:

• Designer handbags, purses, and sunglasses
• Race horses and polo horses
• Premium home theatre systems
• High-end sportswear and shoes (including golf and ski kits)
• Paintings, antiques, and sculptures
• Rare collectibles like stamps and coins
• Luxury watches
• Yachts, helicopters, and canoes

How Will It Work?

• The TCS is governed by Section 206C of the Income Tax Act.
• Sellers are responsible for collecting the tax and associating it with the buyer’s PAN.
• A TCS certificate will be issued post-transaction.
• Buyers can later claim the TCS as a credit while filing their Income Tax Returns.

Compliance on Both Ends:
Sellers must follow strict TCS reporting and deposit timelines, while buyers may face more extensive KYC requirements and additional documentation during purchase.

CBDT Notification Alert!

New rules issued for Tax Collection at Source (TCS) on the purchase of certain goods.

Notification S.O. 1825(E) dated 22.04.2025 published in https://t.co/wgrnm5QBDw

The Notification can be accessed at:https://t.co/6GAXN2t5RS pic.twitter.com/zoRIH6NkXd

— Income Tax India (@IncomeTaxIndia) April 23, 2025

Purpose Behind the Move:
This policy mirrors the existing TCS regulation on luxury vehicles above ₹10 lakh. The goal is to enhance traceability of large-ticket discretionary spending, reduce tax evasion, and align with international standards in luxury market governance.

Expert Insight:
“This is a strategic push towards greater financial transparency and responsible spending,” said the Head of Tax at BDO India. “It’s a step in line with global tax practices and helps widen the audit trail.”