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The imposition of a new 1% Tax Collected at Source (TCS) on luxury items whose purchase amount is over Rs 10 lakh will come into effect starting from 22 April 2025. This step was earlier recommended in Budget 2024.
CBDT has published two notifications for specification of items classified with luxury taxes detailing the taxation rate, cap, and TCS threshold. As per these guidelines, any item categorized as “luxury,” which will cost more than Rs 10 lakh, will attract additional 1% TCS.Identifying The Characteristics Associated With Luxury Goods
The following items fall under this category and will attract the new TCS:
- Watches
- Artefacts including antiques, paintings, and sculptures
- Collectibles such as coins and postage stamps
- Yachts, boats and even aerodynamic helicopters
- Sunglasses
- Eyewear
- Bags (handbags and wallets)
- Footwear
- Sports equipment (e.g., Sportswear and sport-golf and ski kits)
- Home theatre systems
- Quarter horses and horses intended for horse racing or polo
Who Is Covered Under The TCS?
1. Relating to the list above, luxury goods pegged at equal to or more than rupees ten lakhs will come with an extra one percent ‘tax withheld at source’ (TCS). The sum collected is to be appended to the PAN of the buyer and the said person can on claiming return tax in income tax sought.
What Is The Advantage Of TCS To The Buyers?
Tax relief does not burden taxpayer funds and so called paid tax relief is devoid of incurring needless expense later. The taxpayer’s accost is below what was paid, they will claim the surplus returned during the period’s enclosed partnership tax return.
Changed for Under TCS Permission Tax Free Limits On Of Charity And Finance
To this day, cases still apply of these sales free of charge of tax paid till now:
Purchase of cost of assessing vehicle with document exceeding forty thousand with unpaid ten lakh.
Travel and payment abroad
Overseas courier visit packages
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