New Tax Rules TCS: The new tax rule will apply to wristwatches, art works such as paintings, sculptures and antiques, collection items such as coins and stamps, boats, helicopters, luxury handbags, sunglasses, shoes, high-end sports apparel and equipment, home theater systems and horses for race or polo etc.
New Tax Rules: Luxury goods such as handbags, wristwatches, footwear and sportswear (products worn during sports) costing more than Rs 10 lakh will now be taxed at one percent at source (TCS). The Income Tax Department has issued a notification for this. Currently, TCS is being levied at the rate of one percent on motor vehicles costing more than Rs 10 lakh from January 1, 2025.
Tax will be levied on products worth more than Rs 10 lakh
The Income Tax Department has issued a notification to impose one percent TCS on the sale of specific luxury goods worth more than Rs 10 lakh from April 22, 2025. TCS is collected from the buyer at the time of sale of specified goods and can be adjusted against the buyer’s tax liability while filing income tax returns.
Taxing at source does not generate any additional revenue, but it helps the tax department to detect high-value expenditure, as PAN has to be provided at the time of purchase.
The TCS provision for luxury goods and motor vehicles worth more than Rs 10 lakh was introduced in the Budget in July 2024 through the Finance Act, 2024. The responsibility to collect TCS will be on the seller.
New tax will be imposed on these things
It will apply to notified goods such as wristwatches, art works such as paintings, sculptures and antiques, collection items such as coins and stamps, boats, helicopters, luxury handbags, sunglasses, shoes, high-end sports apparel and equipment, home theater systems and horses for race or polo, etc.
Sandeep Jhunjhunwala, tax partner, Nangia Andersen LLP, said that this notification reflects the government’s intention to enhance monitoring of high-value discretionary expenditure and strengthen audits in the luxury goods segment. This notification reflects the broader policy objective of expanding the tax base and promoting greater financial transparency.
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