The Central Board of Direct Taxes (CBDT) has issued a notification to implement 1% Tax Collection at Source (TCS) on luxury goods worth more than Rs 10 lakh from 22 April 2025. The move aims to increase the monitoring of high-value transactions, improve tax compliance and make the tax base comprehensive.
What is the new TCS rule?
Now, if you buy one of the following luxury items for Rs 10 lakh or more, the seller will charge you 1% TCS:
Wristwatch clock
Arts like paintings, sculptures, antiques (art pieces)
Collectible items such as coins, stamps
Boat, helicopter, rowing boat (yachts, helicopters, rowing boats)
Sunglasses
Handbags, Purses (Handbags, Purses)
Shoes
Sportswear and equipment such as golf kits, ski-saplings (Sportswear and Equipment)
Home theater Systems
Horses which are used for racing or polo (Horses for Racing or Polo
This rule is effective from 22 April 2025.
What does TCS mean and how does it work?
TCS is the tax that is charged by the seller at the time of sale from the buyer and deposited to the government.
This tax is connected to the PAN number of the buyer and appears in Form 26AS.
When the buyer files his Income Tax Return (ITR), he can use this TCS as a tax credit.
If the buyer’s tax liability is less than TCS, he may get a return of additional amount.
What is worth noting for buyers?
It may be necessary to complete the KYC process.
Get the TCS receipt from the seller and keep it in your record.
Ensure that the seller collects TCS to the government by connecting TCS to your PAN number.
While filing income tax returns, claim this TCS as a tax credit.
What are the responsibilities for vendors?
Recovery of TCS and submitting to the government.
Forming TCS details in Form 27EQ.
Providing TCS certificate to buyer.
If TCS is not recovered, the seller may face fines and interest.
The purpose of this step
Increasing monitoring of transactions with chills.
To improve tax compliance.
To make the tax base comprehensive.
To focus on the expenses of high-net-forth individuals (HNIS).
conclusion
This new TCS rule will promote transparency and tax compliance in the purchase of high -value luxury goods. Both buyers and sellers need to be aware of this rule so that they can fulfill their tax obligations correctly.
If you need more information about this rule or you are having any difficulty in understanding it, please tell. I am ready to help you.
