Luxury goods above ₹10 Lakh to attract 1% Tax Collected at Source

Aiming to widen the tax net and detect tax evaders, the government has expanded the provision of TCS from motor vehicles (above ₹10 lakh) to other luxurious items like antiques, paintings, sculptures, collectibles (coin and stamp), yachts, rowing boats, canoes, helicopters, sunglasses, handbags, purses, shoes, sportswear, golf kits, ski-wear, home theatre systems, horses for racing in race clubs and for polo, according to a notification issued by the finance ministry.

TCS was introduced in the late 1980s as an anti-evasion measure to track income from businesses like liquor and forest contracts. Under this system, the seller collects tax at source from the buyer at a specified rate. The buyer can adjust the TCS against their total tax liability while filing the income tax return (ITR).

This move is a strategic step towards enhancing tax transparency and tracking high-value consumption trends, Munjal Almoula, head of tax at consultancy firm BDO India, said. “Effective April 22, 2025, the levy applies to notified products exceeding ₹10 lakh in value with tax applicable on the full transaction amount in excess of INR 10 lakh. This move aligns with global trends in tax surveillance and tax transparency,” Almoula added.