Central Government expands 1% TCS to luxury goods
From 22 April 2025, the Income Tax Department has extended the 1% Tax Collected at Source (TCS) on a range of luxury goods priced above ₹10 lakh. This includes watches, art, yachts and more. TCS is a further sales tax on top of Goods and Services Tax.
The move, part of the Finance Act, 2024, operationalizes a key provision of the July 2024 Budget, which amended Section 206C of the Income-tax Act to enhance scrutiny over high-value discretionary spending.
The luxury items now under the TCS ambit include wristwatches, handbags, art pieces such as paintings and sculptures, antiques, collectible items like stamps and coins, sunglasses, high-end shoes, sportswear and equipment, home theatre systems, yachts, helicopters, and horses used in racing or polo. Sellers of these items will be required to collect TCS at the point of sale.
This initiative aims to strengthen the audit trail, improve regulatory oversight, and align luxury spending patterns with taxpayer profiles, helping tax authorities detect evasion. While a similar TCS rule for motor vehicles priced above ₹10 lakh came into effect in January 2025, the latest notification broadens the scope to other goods.
Buyers may also need to comply with stricter KYC norms and documentation requirements during purchase. Though the luxury segment may face short-term compliance challenges, the measure is seen as a step toward formalising the sector and improving tax compliance.
How GST Works in India
India’s Goods and Services Tax (GST) is a comprehensive, destination-based indirect tax levied on the supply of goods and services. It integrates various central and state taxes into one system, with multiple slabs (5%, 12%, 18%, 28%). Businesses collect and remit GST, claiming input tax credits to avoid tax cascading.
