Daijiworld Media Network - New Delhi
New Delhi, April 23: The Central Board of Direct Taxes (CBDT) has issued a notification bringing into immediate effect a 1% tax collected at source (TCS) on the sale of luxury goods priced over Rs 10 lac, including wristwatches, handbags, sunglasses, footwear, and sportswear.
The notification, effective April 22, also applies to art objects such as paintings and sculptures, yachts, home theatre systems, and horses used for racing or polo.
The move operationalises a provision first introduced in the Union Budget 2024–25, which proposed TCS on luxury goods to take effect from January 1, 2025. The Budget had included an amendment requiring sellers of motor vehicles valued at Rs 10 lac or more, and other goods specified by the Central Government, to collect 1% TCS from buyers. However, the implementation awaited a formal notification, which has now been issued.
Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP, noted that the notification puts into action the government’s objective of enhancing oversight of high-value discretionary spending.
“It reflects a broader policy objective of expanding the tax base and promoting greater financial transparency. Sellers will now be required to ensure timely compliance with TCS provisions, while buyers of notified luxury goods may experience enhanced KYC requirements and documentation at the time of purchase,” he said.
Alok Agrawal, partner at Deloitte India, explained, “TCS at the rate of 1% will apply on the entire value of the notified items, provided the transaction value exceeds Rs 10 lac. The move is intended to widen and deepen the tax net in light of rising luxury spending. This may initially trigger more queries, especially directed at high-net-worth individuals (HNIs) who are purchasing such items but are not filing tax returns or are under-reporting income.”
Echoing the sentiment, Amit Maheshwari, tax partner at AKM Global, said, “By including high-value items like wristwatches, antiques, art pieces, yachts, and collectibles under the TCS framework at 1%, the government is broadening the scope of tax compliance beyond motor vehicles.”
The step marks a notable effort by the government to tighten financial disclosures and reinforce audit trails in the luxury goods sector, while signalling a policy shift towards increased financial accountability and compliance monitoring.