From April 22, 2025, people who want to buy luxury goods like costly handbags, art pieces, or watches will have to pay 1% TCS (Tax Collected at Source) if the item costs more than Rs.10 lakh. The Income Tax Department has issued a new rule under which this tax will now be collected at the time of purchase.
This move is part of the government’s plan to keep track of high-value purchases and make the tax system more clear and organised.
List of Luxury Goods Covered Under the New 1% TCS Rule
According to the government’s notification, TCS will be applied to luxury items only if the price is more than Rs.10 lakh. Below are the goods that will now be taxed under this rule:
- Luxury watches
- Paintings, sculptures, antique pieces
- Rare items like old coins and stamps
- Yachts and helicopters
- Expensive branded handbags and sunglasses
- High-end shoes, sportswear, and sports gear
- Premium home theatre systems
- Horses used in racing or polo sports
So, if you’re planning to spend big on any of these things, be ready to pay an extra 1% at the time of buying.
How Will This 1% Tax Be Collected at the Time of Purchase?
Under this new rule, sellers or companies will deduct 1% TCS from the total bill amount at the time of sale. This tax will be applicable only when the total cost of the item crosses Rs.10 lakh.
For example:
If a person buys a sculpture worth Rs.12 lakh, the seller will deduct Rs.12,000 as TCS, and this amount will be deposited to the government.
Why Has the Government Introduced This Rule on Luxury Goods?
This step was first proposed in the Union Budget of July 2024. It was planned for implementation in January 2025, but the final notification came on April 22, 2025.
Experts believe this move is aimed at tracking big spenders, especially those who buy costly items but don’t report income properly. The rule will help the Income Tax Department monitor luxury spending and encourage better tax compliance.
What Tax Experts Are Saying About the New Rule
Alok Aggarwal from Deloitte India shared that most people will not be affected, as only a few buy such expensive goods. But it will help the government identify people who spend big but avoid filing proper taxes.
Munjal Almoula, a tax expert from BDO India, said this is a positive step in improving tax transparency and understanding high-value spending trends. Many countries already follow such systems, and India is moving in the same direction.
