New tax rules: Important news for taxpayers. Now you will have to pay 1 percent TCS on the purchase of luxury items like handbags, wrist clock, shoes, expensive sports apparel and art items worth more than Rs 10 lakh. Currently, TCS is being imposed at a rate of one percent on motor vehicles worth more than Rs 10 lakh from January 1, 2025.
Income tax department notification
The Income Tax Department has issued a notification to impose one percent TCS on the sale of some luxury goods worth more than Rs 10 lakh from April 22, 2025. TCS is collected from the buyer at the time of sale of some items and can be adjusted against the tax liability of the buyer while filing income tax returns.
Tax deduction at the source does not receive any additional revenue, but this helps the tax department to monitor the high price expenditure, as the PAN details have to be presented at the time of shopping. Through the Finance Act, 2024, the provision of TCS for luxury goods and motor vehicles worth more than Rs 10 lakh was presented in the budget of July 2024.
The seller will be responsible for collecting TCS. It will apply to notified objects such as wrist clocks, art items such as paintings, sculptures and antiquities such as coins and tickets, boats, helicopters, luxury handbags, sunglasses, shoes, high -grade sports apparels and equipment, home theater system and horses for racing or polo.
Nangia Anderson LLP tax partner Sandeep Jhunjhunwala said that this notification reflects the government’s intention to increase the monitoring of high -value discretionary expenditure and strengthen the audit in the luxury goods segment. This reflects a comprehensive policy objective of comprehensive by notification and promoting more fiscal transparency.
If the sale price is more than Rs 10 lakh, then tax will be charged at the rate of 1% of the sales amount. For example: If you buy luxury goods worth Rs 30 lakh, the seller will recover from you as TCS. Nangia Anderson LLP tax partner Sandeep Jhunjhunwala said, “This step strengthens the audit trail in the luxury sector and reflects the government’s extensive goal of financial transparency.” “Vendors should ensure timely compliance of TCS rules. Buyers may also face strict KYC investigation and documentation,” he said.
How can buyers claim TCS?
The seller is responsible for depositing the collected TCS in the PAN (permanent account number) of the buyer. This tax appears in your form 26AS and it can be claimed as a credit when you file your income tax return (ITR). If your final tax liability is less than the total collected TCS, you can claim refund. It acts like TDS on salary, where it is adjusted while filing ITRs.
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