CBDT has announced the imposition of 1 per cent TCS on luxury items worth more than Rs 10 lakh in a new notification to be implemented from 22 April 2025. This list includes items like watches, yachts, bags, artworks and home theaters. Now TCS will be collected by the seller on the purchase of such products, which customers will be able to claim as tax credit in ITR…
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TCS on luxury items: If you buy luxury items worth more than Rs 10 lakh, then there will be an additional burden on your pocket. The Central Board of Direct Taxes (CBDT) has issued a notification regarding imposition of Tax Collected at Source (TCS) on luxury goods. Under this, 1% TCS will be applicable on the purchase of luxury items worth more than Rs 10 lakh from April 22, 2025. This provision was proposed in Budget 2024, which has now been formally implemented.
What is said in the notification
CBDT has issued two notifications. One contains a list of items that are classified as luxury items and the other clarifies the tax rate and limit. According to these notifications, if the price of any luxury goods is more than Rs 10 lakh, then TCS will be levied on it at the rate of 1 percent.
📢CBDT Notification Alert!
➡️New rules issued for Tax Collection at Source (TCS) on the purchase of certain goods.
✅Notification S.O. 1825(E) dated 22.04.2025 published in https://t.co/wgrnm5QBDw
🔗The Notification can be accessed at:https://t.co/6GAXN2t5RS pic.twitter.com/zoRIH6NkXd
— Income Tax India (@IncomeTaxIndia) April 23, 2025
On which items TCS will be levied
The following items have been categorised as luxury goods and TCS will be applicable on them:
- Wrist watches
- Artefacts such as antiques, paintings, sculptures
- Collectibles such as coins and postage stamps
- Yachts, boats, helicopters
- Sunglasses
- Bags (handbags, wallets)
- Shoes
- Sports equipment such as sportswear and golf/ski kits
- Home theatre systems
- Horses for horse racing or polo
How will TCS be applicable
If a consumer buys any item included in the above list and its price is more than Rs 10 lakh, then the seller will have to charge 1 percent TCS on the sale amount. This tax will be deposited against the customer’s PAN, which the customer can claim as tax credit in his Income Tax Return (ITR).
What will be the benefit to the buyer
The amount of TCS will be linked to the buyer’s PAN. The buyer can claim this amount as tax credit while filing Income Tax Return (ITR). If the tax liability is less than TCS, then a refund can be obtained.
Where TCS is already applicable
- On purchase of vehicle worth more than Rs 10 lakh
- On foreign travel and foreign remittance
- On overseas tour packages
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