TCS on Luxury Goods

Are you wondering what is this new tax levy in the name of TCS on Luxury Goods? We will elaborate this for you in simple and understandable manner.

Central Board of Direct Taxes (CBDT) in its notification dated 22^nd April 2025, has announced that if someone purchases any luxury goods out of the notified items value above INR 10 Lakhs, then he will have to pay additional 1% of the purchase value in form of TCS (Tax Collection at Source).

What are the Luxury Goods which will be subject to TCS?

As per the notification following goods will be subject to TCS (as per section 206C of Income Tax Act, 1961):

• Sunglasses
• Wrist watches
• Home theatre systems
• Yachts, helicopters, rowing boats, and canoes
• Antiques, paintings, and sculptures
• Handbags and purses
• Collectibles like coins and stamps
• Shoes
• Horses for racing or polo
• Sportswear and equipment like golf kits, ski gear

What is the threshold of Luxury Goods Purchase for TCS?

TCS on the above goods will be subject to the threshold of INR 10 Lakhs i.e. if the value of goods purchased exceeds INR 10 Lakhs, then it will be subject to TCS.

Please note that similar TCS have been already applicable on motor vehicles if the value of purchase exceeds INR 10 Lakhs.

Effective date of 1% TCS on luxury goods

The notification is effective with immediate effect i.e. 22^nd April 2025, which means starting 22^nd April 2025 seller of such luxury goods will collect 1% TCS from buyer if the value of goods exceeds INR 10 Lakhs.

Is this TCS of 1% additional cost for buyer?

Not exactly, the buyer will first pay the TCS of 1% at the time of purchase and later will get credit of this TCS against the income tax payable by him for the year. In case buyer’s tax liability is NIL or less than TCS value, then he will get the refund of full TCS value or balance value respectively.

Key Takeaways for Sellers and Buyers

Things to note from seller and buyer’s point of view:

For Seller

• Seller will collect 1% TCS from buyer at the time of sale of luxury goods above INR 10 Lakhs
• Seller to deposit TCS amount so collected to the Income Tax Department against the buyer’s PAN
• Seller to file return in form 27EQ quarterly showing all TCS collected and deposited, so that amount reflects on buyer’s PAN
• Seller to provide TCS certificate to buyer to enable him to claim tax credit.

For Buyer

• Buyer to pay TCS of 1% over and above the value of Goods
• Buyer to provide his PAN number to seller, so that TCS can be deposited on the same
• Buyer to make sure that the TCS appears in his form 26AS on income tax portal once the seller files TCS return
• Ensure TCS certificate from seller after the return is filed
• Buyer to take credit of TCS collected on such Luxury Goods.