In a significant move aimed at enhancing tax compliance and expanding the tax base, the Government of India has introduced a 1% Tax Collected at Source (TCS) on the sale of specified luxury goods where the consideration exceeds ₹10 lakh. This new provision is notified through Notification No. 36/2025 dated April 23, 2025, and comes into effect from April 22, 2025.
Key Highlights
- TCS Applicability: Sellers of specified luxury goods are required to collect 1% TCS from the buyer if the transaction value exceeds ₹10 lakh.
- Effective Date: The new rule is applicable to transactions conducted on or after April 22, 2025.
- Objective: The measure is designed to improve tracking of high-value purchases, ensuring better monitoring of expenditures by high-net-worth individuals (HNIs) and boosting revenue through indirect compliance.
List of Specified Luxury Goods
The notification includes a specified list of luxury goods to which this provision applies. While earlier TCS provisions under Section 206C(1F) were limited to motor vehicles above ₹10 lakh, this new notification broadens the scope to other categories of luxury items.
Sellers are advised to refer to the official document for the exact classification of goods covered under this rule.
Compliance Requirements
- TCS is to be collected at the time of receipt of consideration for the sale.
- The seller must remit the collected tax to the government within the prescribed timelines and file the appropriate TCS returns.
Legal Reference
This change is codified under the provisions of the Income-tax Act, 1961, and formalized through:
Notification No. 36/2025 dated 23-04-2025
Issued by the Central Board of Direct Taxes (CBDT)
Link to official notification PDF
FAQ –
FAQ
Q.1 What changes were brought in section 206C(1F) of the Income Tax Act, 1961 through
Finance (No. 2) Act, 2024?
Ans. Earlier, Section 206C(1F) provided for collection of tax at source (TCS) on sale of motor
vehicle of value exceeding ten lakh rupees.
Vide Finance (No. 2) Act, 2024, section 206C(1F) was amended to provide that TCS will also
be levied on any other goods of value exceeding ten lakh rupees, as may be notified by the
Central Government in the Official gazette.
Q.2 Which are the luxury goods of value exceeding ten lakh rupees on which TCS will be
levied?
Ans. Vide CBDT Notification No. 36/2025 dated 22.4.2025 SO 1825(E), the following goods
of the value exceeding ten lakh rupees have been notified for collection of tax at source as
specified in sub-section (1F) of section 206C of the Act –
S. No
Nature of goods
any horse for horse racing in race clubs and horse for polo.
Q.3 Whether TCS will be levied on sale of a single item of the notified goods of value
exceeding ten lakh rupees ?
Ans. Yes, TCS will be levied on sale of a single item of the goods of the nature specified in the
above table which is of the value exceeding ten lakh rupees.
Q.4 When will the new provisions become effective?
Ans. The new provisions will become effective from the date of publication of notification i.e.
22.04.2025.
any wrist watch
any art piece such as antiques, painting, sculpture
any collectibles such as coin, stamp
any yacht, rowing boats, canoes, helicopters
any pair of sunglasses
any bag such as handbag, purse
any pair of shoes
any sportswear and equipment such as golf kit, ski-wear
any home theatre system
Conclusion
The imposition of a 1% TCS on luxury goods is a strategic initiative to strengthen tax administration and widen the compliance net. Businesses involved in the sale of high-value goods must prepare for operational changes to ensure timely collection and remittance of TCS in accordance with the new norms.
For further clarification, stakeholders are encouraged to consult their tax advisors or refer to the official FAQs issued by the CBDT.
Stox N Tax 
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