TCS on Luxury Goods – New Categories Notified

Income Tax provides for tax collection at source (TCS) by certain persons at a specified percentage of tax from their buyers on specified transactions. For e.g. TCS is already applicable on Motor car purchase wherein value is above 10 lacs.

Vide notification No. 36/2025 dated April 22, 2025, few more luxury goods (wristwatches, art pieces, collectibles, yachts, helicopters, sunglasses, handbags, shoes, sports gear, home theatre systems, and horses for racing or polo) are added in the said category wherein TCS will be applicable and buyer will be required to pay cost plus TCS of 1% on the same.

It’s important to note that this 1% TCS is not an additional tax burden—it can be claimed as credit by the buyer while filing their Income Tax Return (ITR), effectively adjusting against their total tax liability.

This move is aimed at strengthening the tracking of high-value transactions and increasing tax transparency in luxury spending.

The detailed notification is available at this link. In addition to that, the CBDT issued the FAQs on Notification No. 36/2025 dated April 22, 2025 explaining the changes to section 206C(1F) of the Income Tax Act, 1961. The FAQs is available at this link.