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4d ago

India Implements 1% Tax Collected at Source on Luxury Goods Over ₹10 Lakh

The new tax, effective April 22, 2025, aims to enhance financial transparency and expand the tax base by targeting high-value discretionary spending.

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The government has expanded the provision of TCS from motor vehicles (above ₹10 lakh) to other luxurious items like antiques, painting, sculpture, collectibles (coin and stamp), yacht, rowing boat, canoe, helicopter, sunglasses, handbag, purse, shoes (Representative photo)
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Overview

  • The 1% Tax Collected at Source (TCS) applies to luxury goods priced above ₹10 lakh, including items like wristwatches, handbags, yachts, helicopters, and art objects.
  • Sellers are responsible for collecting and depositing the tax against the buyer's PAN, with buyers able to claim it as credit in their income tax returns via Form 26AS.
  • The measure, introduced in the Finance Act, 2024 and operationalized through an April 22, 2025 notification, expands TCS provisions previously limited to motor vehicles.
  • This policy aims to strengthen audit trails, formalize high-value transactions, and increase oversight of luxury spending to curb tax evasion.
  • While the tax aligns with global trends in financial transparency, sellers in the luxury segment may face increased compliance burdens and documentation requirements.