Now the government has implemented 1% Tax Collection at Source (TCS) on the purchase of luxury items like watches, paintings, sunglasses, shoes, home theater systems and helicopters worth more than Rs 10 lakh. The Central Board of Direct Taxes (CBDT) has announced this by issuing a notification on Wednesday (23 April). CBDT has said that the government has increased the scope of tax on high-value shopping to keep an eye on luxury expenses and to register transactions of more than Rs 10 lakh in the income tax return. The seller will be responsible for collecting this tax. 1% TCS on luxury items has been implemented from April 22. From now on, the seller will have to collect 1% TCS on purchases of more than Rs 10 lakh. The central government has released a detailed list of luxury items under TCS. The purpose of which is to increase the tax base and keep an eye on high-end expenses. List of luxury items on which 1% TCS will be levied 1. Luxury wrist watch 2. Art pieces like antiques, paintings, sculptures 3. Collectibles like coins, stamps 4. Yachts, rowing boats, canoes, helicopters 5. Pair of sunglasses 6. Bags like handbags, purses 7. Pair of shoes 8. Sports wear and equipment like golf kits, ski wear 9. Home theater systems 10. Horses for horse racing in race clubs and horses for polo After the budget proposal of July 2024, the Center has now released the list of luxury items. In view of the increasing expenditure of High Net Worth Individuals (HNIs) on luxury items, a provision was made in the budget to impose tax on purchases of more than Rs 10 lakh. However, the government did not clarify then which items would be considered ‘luxury’. Now from this list, the definition of ‘luxury goods’ in terms of tax has become clear. What is TCS? TCS means Tax Collection at Source. It means tax collected at the source (tax collected from income). TCS is paid by the seller, dealer, vendor, shopkeeper. However, he collects that tax from the buyer or customer while selling any goods. After collecting it, it is the job of the seller or shopkeeper to deposit it. It is controlled under section 206C of the Income Tax Act. Only the sellers of certain types of goods collect it. This type of tax is deducted only when the payment exceeds a limit.
