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4d ago

India Implements 1% Tax on Luxury Goods Above ₹10 Lakh

The new tax, effective April 22, 2025, aims to enhance financial transparency and widen 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

  • A 1% Tax Collected at Source (TCS) now applies to luxury goods priced above ₹10 lakh, including items such as wristwatches, yachts, art objects, and high-end sportswear.
  • The measure, introduced under the Finance Act, 2024, was operationalized on April 22, 2025, as part of India's broader push for financial transparency and tax compliance.
  • Sellers are responsible for collecting and depositing the tax against buyers' PAN, with the amount reflected in Form 26AS and claimable as credit in income tax returns.
  • Buyers of these luxury items will face stricter Know Your Customer (KYC) requirements and additional documentation at the time of purchase.
  • Experts note that the move aims to curb black money usage, improve audit trails, and formalize the luxury goods market, though it may impose compliance challenges for sellers.