Buying luxury goods? Handbags, wrist clocks, shoes and other items above Rs 10 lakh now to attract 1% TCS

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Handbags, wrist clocks, shoes and price above Rs 10 lakh will now attract 1% tax collected in the source (TCS). In a notification issued on April 22, 2025, detailed categories of Income Tax Department which will now be under this TCS.
Although TCS does not result in any additional revenue, the step is aimed at improving the capacity of the Income Tax Department to track the procurement of high-value, as PAN details are mandatory at the time of purchase. The paid TCS can be adjusted against the final tax liability of the buyer while filing returns.
List of luxury goods above Rs 10 lakh under 1% TCS
Accessories: wrist watches, sunglasses, shoes and handbags
Art pieces: sculptures, antiques, paintings
Collection: Coin, Stamp
Transport: Roing Boat, Dongy, Helicopter, Bach
Sports Gear: Golf Kit, Ski-Vier
Home Theater System
Horses for racing and polo games
The provision for luxury goods and motor vehicles costing more than Rs 10 lakh was started through Finance Act 2024, as part of the Union Budget presented in July last year.
Tax experts believe that steps will improve transparency and tighten the loop around discretionary expenses.
Nangia Anderson LLP tax partner Sandeep Jhunjhunwala told PTI that the notification has strengthened the objective of the government to closely monitor the high-value discretionary expenses and improve the audit trail within the luxury goods segment.
“Vendors will now need to ensure timely compliance with TCS provisions, while notified luxury goods may increase KYC requirements and documentation at the time of purchase.”
He further said, although the field may go through some transitional challenges, this measure is expected to promote formalities and better regulatory monitoring over time,
“This will increase the traceability of luxury expenditure in AKM Global.” Additionally, he said, by bringing high-value items in TCS framework with 1% rate, the government is widening the tax net beyond motor vehicles only.